<PAGE>

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               UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549
                                       
                                  FORM 10-KSB 

/X/  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
     1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996

/ /  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
     OF 1945 FOR THE TRANSITION PERIOD FROM            TO 
                                            ----------    ----------
                                       
                        COMMISSION FILE NUMBER 0-28894

                         ACCESS ANYTIME BANCORP, INC.
                (Name of small business issuer in its charter)
                                       
            DELAWARE                                     85-0444597
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)
                                       
                   801 PILE STREET, CLOVIS, NEW MEXICO  88101
              (Address of principal executive offices)  (Zip Code)
                                       
       Issuer's telephone number, including area code:  (505) 762-4417
                                       
     SECURITIES REGISTERED UNDER SECTION 12(b) OF THE EXCHANGE ACT: NONE

     SECURITIES REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT:
                                       
                         COMMON STOCK $.01 PAR VALUE
                         ---------------------------
                              (Title of class)

    Check whether the issuer (1) filed all reports required to be filed by 
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for 
such shorter period that the registrant was required to file such reports), 
and (2) has been subject to such filing requirements for the past 90 days.

                             Yes /X/     No / /

    Check if there is no disclosure of delinquent filers in response to Item 
405 of Regulation S-B contained herein, and no disclosure will be contained, 
to the best of the registrant's knowledge, in definitive proxy of information 
statements incorporated by reference in Part III of this Form 10-KSB or any 
amendment to this Form 10-KSB. /X/

    The issuer's revenues for the year ended December 31, 1996, were 
$8,278,239.

    The aggregate market value of the voting stock held by non-affiliates of 
the issuer, computed by reference to the average of the closing bid and asked 
prices of such stock on the Nasdaq Small-Cap Market as of March 3, 1997 was 
approximately $4,502,000.  (The exclusion from such amount of the market 
value of the shares owned by any person shall not be deemed an admission by 
the issuer that such person is an affiliate of the issuer.)

    As of March 3, 1997, the issuer had outstanding 1,020,652 shares of 
Common Stock, par value $0.01 per share, its only class of Common Stock.
                                       
                     DOCUMENTS INCORPORATED BY REFERENCE

    The following document is incorporated by reference into Part III of this 
Annual Report on Form 10-KSB: Definitive Proxy Statement for the issuer's 
1997 Annual Meeting of Stockholders.

    Transitional Small Business Disclosure Format (check one):  
Yes / /     No /X/

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<PAGE>
                                       
                               TABLE OF CONTENTS
                                       
                                                                            PAGE
                                                                            ----
                                     PART I
                                       
Item 1.  Description of Business............................................  4
         Overview...........................................................  4
         Lending Activities.................................................  4
              General.......................................................  4
              Loan Portfolio Composition....................................  6
              One-to-Four Family Residential Mortgage Lending...............  8
              Multi-Family and Commercial Real Estate Lending...............  9
              Commercial Business Lending................................... 10
              Construction Lending.......................................... 10
              Consumer Lending.............................................. 10
              Loan Servicing................................................ 11
         Originations, Purchases and Sales of Loans......................... 11
         Asset Quality...................................................... 12
              Delinquent Loans.............................................. 12
              Non-Performing Assets......................................... 13
              Criticized Assets............................................. 14
              Allowance for Loan Losses..................................... 14
         Investment Activities.............................................. 16
              General....................................................... 16
              Other Investments............................................. 18
         Sources of Funds................................................... 18
              The Company................................................... 18
              The Bank...................................................... 18
              Borrowings.................................................... 22
         Subsidiary of the Bank............................................. 22
         Regulation......................................................... 22
              General....................................................... 22
              Regulation of the Company..................................... 23
              Federal Securities Law........................................ 24
              Insurance of Accounts and Regulations by the FDIC............. 24
              Regulatory Capital Requirements............................... 25
              Limitations on Dividends and Other Capital Distributions...... 27
              Liquidity..................................................... 28
              Accounting.................................................... 28
              Qualified Thrift Lender Test.................................. 28
              Community Reinvestment Act.................................... 29
              Transactions with Affiliates.................................. 29
              Federal Home Loan Bank System................................. 30
              Written Agreements with OTS................................... 30
              Regulatory Environment for 1997............................... 31
         Federal and State Taxation......................................... 32
              Federal Taxation.............................................. 32
              State Taxation................................................ 34
         New Accounting Standard............................................ 34
         Competition........................................................ 34
         Employees.......................................................... 34
                                       
                                 (Continued)

                                      2
<PAGE>
                                      
                               TABLE OF CONTENTS
                                  (CONTINUED)
                                      
                                                                            PAGE
                                                                            ----

Item 2.  Description of Property............................................ 35

Item 3.  Legal Proceedings.................................................. 35

Item 4.  Submission of Matters to a Vote of Security Holders................ 36

                                       
                                    PART II
                                       
Item 5.  Market for Registrant's Common Equity and 
         Related Stockholder Matters........................................ 36

Item 6.  Management's Discussion and Analysis or Plan of Operation.......... 37
         Selected Consolidated Financial Highlights......................... 37
         General............................................................ 39
         Regulatory Matters................................................. 40
         Results of Operations.............................................. 41
              Comparison of Years Ended December 31, 1996 and 1995.......... 43
              Comparison of Years Ended December 31, 1995 and 1994.......... 43
         Asset/Liability Management and Interest Rate Sensitivity........... 44
         Liquidity and Capital Resources.................................... 47
         Asset Quality...................................................... 49
              Allowance for Loan Losses..................................... 49
              Non-Performing Assets......................................... 50
              Investment Securities......................................... 50
         Off-Balance Sheet Financial Instruments............................ 51
         Income Taxes....................................................... 51
         Impact of Inflation and Changing Prices............................ 52
         Impact of New Accounting Standard.................................. 52
         Forward-Looking Information........................................ 52

Item 7.  Financial Statements............................................... 52

Item 8.  Changes In and Disagreements with Accountants on 
         Accounting and Financial Disclosures............................... 52

                                       
                                    PART III
                                       
Item 9.  Directors, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act.................. 53

Item 10. Executive Compensation............................................. 53

Item 11. Security Ownership of Certain Beneficial Owners and Management..... 53

Item 12. Certain Relationships and Related Transactions..................... 53

Item 13. Exhibits and Reports on Form 8-K................................... 54

Signatures.................................................................. 56

Index to Consolidated Financial Statements.................................. F-1

Glossary of Certain Terms................................................... G-1

                                      3
<PAGE>
                                       PART I

ITEM 1.   DESCRIPTION OF BUSINESS.

PLEASE REFER TO THE GLOSSARY OF CERTAIN TERMS (PAGE G-1) FOR DEFINITIONS OF
VARIOUS TERMS.

OVERVIEW

    Access Anytime Bancorp, Inc. (the "Company") is a Delaware corporation 
which was organized in 1996 for the purpose of becoming the thrift holding 
company of First Savings Bank, F.S.B. a.k.a. First Bank (the "Bank").  The 
Company owns all of the outstanding stock of the Bank, which is the Company's 
principal asset. The Bank was originally chartered by the FHLBB in 1934. 
Currently, deposits with the Bank are insured to maximum extent permitted by 
the SAIF, which is under the supervision of the FDIC.  The Bank is a member 
of the FHLB system and the Company and the Bank are subject to comprehensive 
regulation, examination, and supervision of the OTS and the FDIC. 

    The Bank is the third largest financial institution headquartered in 
Clovis, New Mexico, with approximately $107 million in assets.  The Bank 
conducts full service banking operations through three offices located in 
Clovis and Portales, New Mexico and through a loan production office in Rio 
Rancho, New Mexico, near Albuquerque.  The Company's executive offices are 
located at 801 Pile Street, Clovis, New Mexico.  The telephone number at that 
address is (505) 762-4417.  In general, the Bank has a normal lending 
territory, as defined by federal regulations, that includes all areas within 
the State of New Mexico, and a 100 mile radius from the Company's main office 
in Clovis, New Mexico, which extends into the State of Texas.  The primary 
service area's economic base is derived from Cannon Air Force Base, a 
regional switching headquarters for the Burlington Northern Santa Fe 
Railroad, Eastern New Mexico University, and farming and ranching.

    The Company's and the Bank's revenues are derived principally from 
interest on loans and securities, servicing fee income, income from deposit 
account service charges and gains on the sale of loans.  The results of 
operations of the Company and the Bank, in general, are significantly 
influenced by general economic conditions, the monetary and fiscal policies 
of the federal government, competition in the Company's and the Bank's market 
area, and the policies of financial institution regulatory authorities. 

    The Bank, since 1991, has been primarily engaged in the business of 
attracting deposits from the general public, making loans secured by first 
liens on single-family homes (primarily for sale into the secondary market) 
and investing in mortgage related securities.  The principal sources of funds 
for the Bank's lending and investing activities include the sale of loans, 
principal payments and prepayments on loans and mortgage related securities, 
and deposits. The Bank's primary sources of income are income on loans and 
securities, loan servicing fees, income from deposit account service charges, 
and gains on the sale of loans.  Its principal expenses are interest paid on 
deposits and borrowings and general operating expenses.  The earnings of the 
Bank depend primarily on the differences between its income from lending and 
investment activities and the interest cost of its deposits and borrowings. 

LENDING ACTIVITIES

    GENERAL.  The Bank has historically originated fixed-rate and 
adjustable-rate mortgage loans.  In order to reduce its exposure to changes 
in interest rates, it has also, since the early 1980's, emphasized the 
origination and retention of ARM loans.  Management's strategy has been to 
increase assets in its portfolio which more frequently reprice or which have 
shorter maturities. In response to customer demand, however, the Bank 
continues to originate conventional fixed-rate mortgages.

    The Bank's primary focus in lending activities is on the origination of 
loans secured by first mortgages on owner-occupied, one-to-four family 
residences.  The Bank also originates residential construction, commercial 
real estate and consumer loans in its market area.  Most residential mortgage 
loans originated by the Bank are in conformity with FHLMC, FNMA and GNMA loan 
underwriting standards so that they may be sold 

                                      4
<PAGE>

in the secondary market. Mortgage loans made by the Bank are generally 
long-term loans, amortized on a monthly basis, with principal and interest 
due each month.  The initial contractual loan payment period for residential 
loans typically ranges from 15 to 30 years.  The Bank's experience indicates, 
however, that real estate loans remain outstanding for significantly shorter 
periods than their contractual terms. Borrowers may refinance or prepay loans 
at their option, subject to any prepayment penalty provisions, if included in 
the note.  Most mortgage loans are underwritten and approved by the Bank's 
loan committee.

    All of the Bank's lending is subject to written underwriting standards 
and to loan origination procedures.  Decisions on loan applications are made 
on the basis of detailed applications and property valuations (consistent 
with the Bank's written appraisal policy) by independent appraisers.  The 
loan applications are designed primarily to determine the borrower's ability 
to repay and the more significant items on the application are verified 
through use of credit reports, financial statements, tax returns and/or 
confirmations.

    In connection with the loan approval process, the Bank's loan personnel 
analyze the loan application and the property involved.  All real estate 
loans are processed and presented by the officers to the loan committee. 
Consumer loans are approved by loan committee and/or individual loan 
officers, in accordance with policies established by the Bank's Board of 
Directors.

    Loan applicants are notified of the Bank's decision setting forth the 
terms and conditions of the decision.  If approved, these terms and 
conditions include the amount of the loan, interest rate, amortization term, 
a brief description of the real estate to be mortgaged to the Bank, and the 
requirement of fire and casualty insurance coverage to be maintained to 
protect the Bank's interest.

    It is the policy of the Bank to obtain a title insurance policy insuring 
that it has a valid lien on all property securing real estate loans.  Hazard 
insurance or homeowner's policies must be obtained by the borrower prior to 
closing.  If required by federal rules and regulations, flood insurance 
policies are required. Upon closing, most borrowers are required to advance 
funds for the establishment of a mortgage escrow account. Thereafter, the 
borrower makes contributions to this account along with monthly principal and 
interest payments. Disbursements are made from this account for items such as 
real estate taxes, hazard insurance premiums, and private mortgage insurance 
premiums.

    The Bank receives loan origination fees for originating loans and also 
receives commitment fees for making commitments to originate construction, 
residential, commercial, and multi-family residential loans, as well as 
various fees and charges related to existing loans, which include late 
charges and assumption fees.

    As part of the loan application, the borrower pays the Bank for its 
out-of-pocket costs in reviewing the application, such as the appraisal fee, 
whether or not the borrower closes the loan.  The interest rate charged is 
normally the prevailing rate at the time the loan application is approved.  
In the case of larger construction loans, the Bank normally charges a 1% 
commitment fee, which may be included in the loan origination charge when the 
loan is made. Commitment fees and other terms of commercial and multi-family 
residential loans are individually negotiated.

    The Bank also maintains an escrow account for most of its loans secured 
by real estate (as well as for loans serviced for others), in order to ensure 
that the borrower provides funds to cover property taxes in advance of the 
required payment.  These accounts are analyzed annually to confirm that 
adequate funds are available.  For loans which do not include an escrow 
requirement, an annual review of tax payments is performed by the Bank in 
order to confirm payment.  In order to monitor the adequacy of cash flows on 
income-producing properties, the borrower or lead lender is notified 
periodically and asked to provide financial information including rental 
rates and income, maintenance costs and an update of real estate property tax 
payments.

    The aggregate amount of loans that the Bank is permitted to make under 
applicable federal regulations to any one borrower, including related 
entities, is limited generally to the greater of 15% of unimpaired capital 
and surplus or $500,000.  At December 31, 1996, the maximum amount which the 
Bank could have lent to any one borrower and the borrower's related entities 
was approximately $863,000.  One loan in excess of $863,000 with a 

                                       5
<PAGE>

remaining principal balance of $1,572,814 at December 31, 1996 is described 
in "ASSET QUALITY-NON-PERFORMING ASSETS, NOTE (2)", in this Item.  This loan 
was made prior to the implementation of the current loan to one borrower 
limitations.

    LOAN PORTFOLIO COMPOSITION.  The following table shows the composition of 
the Bank's loan portfolio in dollar amounts and in percentages as of dates 
indicated.

<TABLE>
                                                               December 31
                                     ----------------------------------------------------------------
                                            1996                   1995                  1994
                                     ---------------------  --------------------  -------------------
                                      Amount     Percent     Amount    Percent     Amount    Percent
                                     --------   --------    --------  ---------   --------  ---------
                                                          (Dollars in Thousands)
<S>                                  <C>          <C>       <C>         <C>      <C>          <C>
Real estate loans (a):  
    Residential mortgage loans:   
      One-to-four family . . . . . . $ 26,921      56.76%   $ 22,991    63.94%   $ 22,950    61.53%
      Multi-family . . . . . . . . .      961       2.03         995     2.76       1,047     2.81
      Other dwelling units . . . . .    1,060       2.23       1,114     3.10       1,168     3.13
    Commercial . . . . . . . . . . .    9,260      19.52       5,683    15.81       8,230    22.06
                                     --------     ------    --------   ------    --------   ------
         Total real estate loans . .   38,202      80.54      30,783    85.61      33,395    89.53
                                     --------     ------    --------   ------    --------   ------

Other loans:                                                                                
    Savings accounts . . . . . . . .      867       1.83         897     2.50         851     2.28
    Other consumer items (b) . . . .    8,360      17.63       4,276    11.89       3,055     8.19
                                     --------     ------    --------   ------    --------   ------
         Total other loans . . . . .    9,227      19.46       5,173    14.39       3,906    10.47
                                     --------     ------    --------   ------    --------   ------
         Total loans . . . . . . . .   47,429     100.00%     35,956   100.00%     37,301   100.00%
                                                  ------               ------               ------
                                                  ------               ------               ------
Less:
      Loans in process . . . . . . .    1,077                    863                  317
      Discounts, deferred loan                                                
       fees and other. . . . . . . .      327                    333                  853
      Allowance for loan losses. . .      429                    428                  461
                                     --------               --------             --------
         Total loans receivable, 
          net. . . . . . . . . . . . $ 45,596               $ 34,332             $ 35,670
                                     --------               --------             --------
                                     --------               --------             --------
</TABLE>
(a) Includes construction loans to be converted to permanent loans and
    refinanced loans.
(b) Includes, among other things, student, automobile, credit card and home
    improvement loans.

                                       6
<PAGE>

    The following table shows the composition of the Bank's loan portfolio by
fixed- and adjustable-rate categories at the dates indicated.

<TABLE>
                                                               December 31
                                     ----------------------------------------------------------------
                                            1996                   1995                  1994
                                     ---------------------  --------------------  -------------------
                                      Amount     Percent     Amount    Percent     Amount    Percent
                                     --------   --------    --------  ---------   --------  ---------
                                                          (Dollars in Thousands)
<S>                                  <C>          <C>       <C>         <C>      <C>          <C>
Fixed-rate loans:       
Real estate (a):        
   Residential mortgage loans:        
      One-to-four family . . . . .  $ 15,345      32.35%   $ 10,554    29.35%   $  9,671    25.93%
      Multi-family . . . . . . . .       573       1.21         562     1.57         578     1.55
      Other dwelling units . . . .       321       0.68         324     0.90         330     0.88
   Commercial. . . . . . . . . . .     4,518       9.52       1,176     3.27       3,485     9.34
                                    --------     ------    --------   ------    --------   ------
         Total real estate loans .    20,757      43.76      12,616    35.09      14,064    37.70
                                    --------     ------    --------   ------    --------   ------

Other :       
   Savings accounts. . . . . . . .       867       1.83         897     2.50         851     2.28
   Consumer (b). . . . . . . . . .     8,038      16.95       1,859     5.16         731     1.96
                                    --------     ------    --------   ------    --------   ------
         Total consumer loans. . .     8,905      18.78       2,756     7.66       1,582     4.24
                                    --------     ------    --------   ------    --------   ------
         Total fixed-rate loans. .    29,662      62.54      15,372    42.75      15,646    41.94
                                    --------     ------    --------   ------    --------   ------

Adjustable-rate loans:                                   
Real estate (a):                                         
   Residential mortgage loans:        
      One-to-four family . . . . .    11,576      24.40      12,437    34.59      13,279    35.60
      Multi-family . . . . . . . .       388       0.82         433     1.21         469     1.26
      Other dwelling units . . . .       739       1.56         790     2.20         838     2.25
   Commercial. . . . . . . . . . .     4,742      10.00       4,507    12.53       4,745    12.72
                                    --------     ------    --------   ------    --------   ------
         Total real estate loans .    17,445      36.78      18,167    50.53      19,331    51.83

Consumer (b) . . . . . . . . . . .       322       0.68       2,417     6.72       2,324     6.23
                                    --------     ------    --------   ------    --------   ------
         Total adjustable-rate                  
          loans. . . . . . . . . .    17,767      37.46      20,584    57.25      21,655    58.06
                                    --------     ------    --------   ------    --------   ------
         Total loans receivable. .    47,429     100.00%     35,956   100.00%     37,301   100.00%
                                                 ------               ------               ------
                                                 ------               ------               ------
Less:         
   Loans in process. . . . . . . .     1,077                    863                  317
   Discounts, deferred loan fees                    
    and other. . . . . . . . . . .       327                    333                  853
   Allowance for loan losses . . .       429                    428                  461
                                    --------               --------             --------
         Total loans receivable,                    
          net. . . . . . . . . . .  $ 45,596               $ 34,332             $ 35,670
                                    --------               --------             --------
                                    --------               --------             --------
</TABLE>

(a) Includes construction loans to be converted to permanent loans and
    refinanced loans.
(b) Includes, among other things, student, automobile, credit card and home
    improvement loans.

                                       7

<PAGE>


    The following table outlines the specific loan types with contractual
maturity dates as of December 31, 1996.  Loans which have adjustable or
renegotiable rates are shown as maturing during the period when the contract
is due.  This schedule does not reflect the effects of possible principal
prepayments by the borrower.

<TABLE>
                                      Real Estate                          Non-Real Estate
                          -----------------------------------  -------------------------------------
                                                                                     Commercial
                              Mortgages        Construction         Consumer          Business             Total
                          -----------------  -----------------  -----------------   -----------------  ------------------
                                   Weighted           Weighted           Weighted            Weighted           Weighted
                                   average            average            average             average             average
                           Amount    rate     Amount    rate     Amount    rate      Amount    rate     Amount     rate
                          -------    ----     ------    ----     ------    -----     ------    ----     -------    ----
                                                                 (Dollars in Thousands)
<S>                       <C>        <C>      <C>       <C>      <C>       <C>       <C>       <C>      <C>        <C>
Within one year           $ 1,495    8.94%    $1,975    8.91%    $1,228     9.71%    $  280     9.80%   $ 4,978    9.17%
More than one year
 through two years          1,593    8.52         --      --        690    11.11         11    10.78      2,294    9.31
More than two years
 through three years          201    8.73         --      --      1,006    11.12        442     7.02      1,649    9.73
More than three years
 through five years         1,189    9.54         --      --      4,023    10.67        230     8.91      5,442   10.35
More than five years
 through ten years          3,481    8.73         --      --      1,046    12.10        241     9.72      4,768    9.52
More than ten years
 through fifteen years     12,164    8.20         --      --         --       --         --       --     12,164    8.20
More than fifteen years    16,104    8.21         --      --         30     5.50         --       --     16,134    8.20
                          -------    ----     ------    ----     ------    -----     ------     ----    -------   -----
Total loans receivable    $36,227    8.34%    $1,975    8.91%    $8,023    10.78%    $1,204     8.60%   $47,429    8.79%
                          -------    ----     ------    ----     ------    -----     ------     ----    -------   -----
                          -------    ----     ------    ----     ------    -----     ------     ----    -------   -----
</TABLE>

    As of December 31, 1996, the total amount of loans with maturities longer
than one year which had fixed interest rates was approximately $25 million
and with floating or adjustable interest rates was approximately $17 million.

         ONE-TO-FOUR FAMILY RESIDENTIAL MORTGAGE LENDING.  The primary
lending activity of the Bank has been the granting of conventional loans to
enable borrowers to purchase new or existing homes.  The Bank also originates
VA-guaranteed and FHA-insured loans.  Residential loan originations are
generated by the Bank's marketing efforts, its present customers, walk-in
customers and referrals from realtors and builders.  The Bank has focused its
lending efforts primarily on the origination of loans secured by first
mortgages on owner-occupied, single-family residences in its market area.

    The Bank's fixed-rate loans generally conform to secondary market
standards (I.E., FHLMC, FNMA and GNMA standards) and, since 1991, have been
primarily originated for sale in the secondary market.  A portion of these
loans has been originated pursuant to forward sales commitments.  Most of the
Bank's fixed-rate residential loans have contractual terms to maturity of 30
years.  As a part of its asset/liability management strategy and in response
to an increase in refinancing activity, the Bank also originates 15 year
fixed-rate, fully amortizing loans.  Interest rates charged on these
fixed-rate loans are competitively priced according to market conditions.

    The Bank has offered ARM loans at rates, terms and fees determined in
accordance with market and competitive factors.  The programs currently
offered primarily meet the standards and requirements of the secondary market
for residential loans.  The Bank's current one-to-four family residential ARM
loans are fully amortizing loans with contractual maturities of up to 30
years.  The interest rates on the ARM loans originated by

                                     8

<PAGE>

the Bank are subject to adjustment at stated intervals and are subject to 
annual and lifetime adjustment limits below and above the initial rate.  Most 
of the Bank's ARM loans have interest rates which adjust annually based on a 
margin over one of several indices. These loans' annual and lifetime caps on 
interest rate increases may reduce the extent to which they can help protect 
the Bank against interest rate risk.  The Bank has from time to time offered 
ARM loans at below the fully-indexed rate; however, borrowers of ARM loans 
are qualified at the fully-indexed rates.  

    The Bank retains ARM loans in its portfolio consistent with its ongoing 
asset/liability objectives.  ARM loans decrease the risks associated with 
changes in interest rates but involve other risks, primarily because as 
interest rates rise, the payment by the borrower rises to the extent 
permitted by the terms of the loan, thereby increasing the potential for 
default.  At the same time, the marketability of the underlying property may 
be adversely affected by higher interest rates.  The Bank believes that these 
risks, which have not had a material adverse effect on the Bank to date, 
generally are less than the risks associated with holding fixed-rate loans in 
a rising interest rate environment. In this regard, the Bank's delinquency 
experience on its ARM loans has generally been similar to its experience on 
fixed-rate residential loans.

    The Bank evaluates both the borrower's ability to make principal, 
interest and escrow payments and the value of the property that will secure 
the loan. The Bank originates residential mortgage loans with loan-to-value 
ratios up to 95%.  On any mortgage loan exceeding an 80% loan-to-value ratio 
at the time of origination, the Bank will generally require private mortgage 
insurance in an amount intended to reduce the Bank's exposure to 80% or less 
of the appraised value of the underlying property, unless otherwise approved 
by the Bank's Board of Directors.

    The Bank's residential mortgage loans customarily include a due-on-sale 
clause giving the Bank the right to declare the loan immediately due and 
payable in the event that, among other things, the borrower sells or 
otherwise disposes of the property subject to the mortgage and the loan is 
not repaid.  The Bank has generally enforced due-on-sale clauses in its 
mortgage loan contracts. Yield increases may be obtained through the 
authorization of assumptions of existing loans at higher rates of interest, 
assuming the current rates are higher than the existing note rate, and the 
imposition of assumption fees.  ARM loans may be assumed provided home buyers 
meet the Bank's underwriting standards and the applicable fees are paid.
    
MULTI-FAMILY AND COMMERCIAL REAL ESTATE LENDING.  The Bank's multi-family and 
commercial real estate loan portfolio includes loans secured by apartment 
buildings, office buildings, retail stores and other properties, most of 
which are located in the Bank's normal lending territory.  The Bank intends 
to originate multi-family and commercial real estate loans in the future, 
subject to regulatory restrictions.  Multi-family and commercial real estate 
loans generally are originated in amounts up to 75% of the appraised value of 
the property securing the loan.  Commercial and multi-family loans are made 
at both fixed and adjustable interest rates for terms of up to 25 years.  The 
terms and conditions of multi-family and commercial real estate loans are 
negotiated on a case-by-case basis.

   Appraisals on properties securing multi-family and commercial real estate 
loans originated by the Bank are performed by an independent appraiser 
subject to regulatory guidelines at the time the loan is made.  All 
appraisals on multi-family and commercial real estate loans are reviewed by 
the Bank's management. In addition, the current underwriting procedures 
require verification of the borrower's credit history, income and financial 
statements, banking relationships, references and income projections for the 
property.  Personal guarantees are generally obtained for the Bank's 
multi-family and commercial real estate loans.

    Multi-family and commercial real estate lending affords the Bank an
opportunity to receive interest at rates higher than those generally available
from one-to-four family residential lending.  Nevertheless, loans secured by
such properties are generally larger and involve a greater degree of risk than
one-to-four family residential mortgage loans.  Because payments on loans
secured by multi-family and commercial real estate properties are often
dependent on the successful operation or management of the properties, repayment
of such loans may be subject to adverse conditions in the real estate market or
the economy.  If the cash flow from the 

                                       9

<PAGE>

project is reduced (for example, if leases are not obtained or renewed), the 
borrower's ability to repay the loan may be impaired.  In addition, 
adjustable-rate multi-family and commercial real estate loans are subject to 
increased risk of delinquency or default as interest rates increase.  The 
Bank has attempted to minimize these risks through its underwriting standards 
and by lending primarily on existing income-producing properties.

    COMMERCIAL BUSINESS LENDING.  The Bank began offering commercial business 
loans guaranteed by the SBA in 1991.  The SBA program provides lenders with 
the ability to offer flexible terms and longer maturities on loans to small 
businesses and professionals.  The program provides the lender a guaranteed 
portion (generally 75%-80%) of principal and interest.  Since these loans are 
guaranteed, they generally offer minimal risk to the Bank.  These loans are 
made with adjustable and fixed interest rates with maturities of up to 25 
years, depending on the underlying collateral.  The loans are approved by the 
SBA.  The Bank intends to expand its commercial lending by utilizing the SBA 
program.

    The Bank intends to provide short and medium term credit to businesses in 
the Bank's primary lending territory.  Commercial loans include revolving 
credit lines and term loans, or a combination thereof, and are generally 
secured by equipment, accounts receivable, inventories, real estate or other 
business assets or a combination thereof.  Commercial business loans are made 
pursuant to specified loan approval limits set by the Bank's Board of 
Directors.  The Bank usually requires that business borrowers maintain their 
operating accounts with the Bank in the form of demand deposits.  Loans made 
to corporations are generally personally guaranteed by the principals of the 
corporation.

    CONSTRUCTION LENDING.  The Bank originates loans to finance the 
construction of single-family residences and commercial businesses.  Many of 
these loans are made to individuals who will ultimately be the 
owner-occupants of the residence.  Such loans are generally made, although 
not required, with permanent financing on the constructed property to be 
provided by the Bank. Construction loans are generally made with a six month 
term on a fixed-rate, interest-only basis.  Residential construction loans to 
owner-occupants are generally underwritten using the same criteria as for 
one-to-four family residential loans.  Commercial construction loans are 
generally made with 12 to 24 month maturities.  Loan proceeds are disbursed 
in increments as construction progresses and inspections warrant. 

    Construction loans afford the Bank the opportunity to charge loan 
origination fees, to increase the frequency of repricing of its loan 
portfolio and to earn yields higher than those obtainable on loans secured by 
existing one-to-four family residential properties.  The higher yields 
reflect the higher risks associated with construction lending, which include 
principally the difficulty in evaluating accurately the total funds required 
to complete a project and the post-completion value of the project.  As a 
result, the Bank places a strong emphasis upon the borrower's ability to 
repay and the experience and expertise of the builder who has contracted to 
construct the property.

    CONSUMER LENDING.  Management considers consumer lending to be an 
important component of its strategic plan.  Specifically, consumer loans 
generally have shorter terms to maturity (thus reducing the Bank's exposure 
to changes in interest rates) and carry higher rates of interest than do 
one-to-four family residential mortgage loans. In addition, management 
believes that the offering of consumer loan products helps to expand and 
create stronger ties to its existing customer base by increasing the number 
of customer relationships and providing cross-marketing opportunities.  Under 
applicable federal laws, the Bank is authorized to invest up to 35% of its 
assets in consumer loans excluding credit card and education loans.

    The Bank offers a variety of secured consumer loans, including home 
improvement loans, auto loans, personal lines of credit, equity lines of 
credit and loans secured by savings deposits.  The Bank also offers a limited 
amount of unsecured and credit card loans.  The Bank currently originates all 
of its consumer loans in its market area.  Consumer loan terms vary according 
to the type of collateral, length of contract and creditworthiness of the 
borrower. The Bank's consumer loans generally have fixed rates of interest.

    The Bank currently has three arrangements to originate consumer automobile
loans on an indirect basis (I.E., where loan contracts are purchased from
automobile retailers which have extended credit to their 

                                       10

<PAGE>

customers).  The Bank applies the underwriting standards mentioned below in 
the approval process of purchasing these contracts.  These loans have a fixed 
interest rate and maturities of 6 years or less.  As of December 31, 1996, 
the Bank had $3,734,552 in indirect automobile contracts or 7.9% of its loan 
portfolio before net items.

    The underwriting standards employed by the Bank for consumer loans 
include a determination of the applicant's payment history on other debts and 
an assessment of the ability to meet existing obligations and payments on the 
proposed loan.  Although creditworthiness of the applicant is a primary 
consideration, the underwriting process also includes a comparison of the 
value of the security, if any, in relation to the proposed loan amount.

    Consumer loans may entail greater risk than do residential mortgage 
loans, particularly in the case of consumer loans which are unsecured, or 
secured by rapidly depreciable assets, such as automobiles.  In such cases, 
any repossessed collateral for a defaulted consumer loan may not provide an 
adequate source of repayment of the outstanding loan balance as a result of 
the greater likelihood of damage, loss or depreciation.  In addition, 
consumer loan collections are dependent on the borrower's continuing 
financial stability, and thus are more likely to be affected by adverse 
personal circumstances.  Furthermore, the application of various federal and 
state laws, including bankruptcy, may limit the amount which can be recovered 
on such loans.  Although the level of delinquencies in the Bank's consumer 
loan portfolio has generally been low (at December 31, 1996, $24,000, or .26% 
of the consumer loan portfolio, was 60 days or more delinquent), there can be 
no assurance that delinquencies will not increase in the future.

    LOAN SERVICING.  In addition to servicing its own loans, the Bank 
services mortgage loans for others.  It is the practice of the Bank to sell 
most fixed-rate loans and retain most adjustable-rate loans.  Most 
conventional loans are sold to FNMA and the servicing is retained.  VA and 
FHA loans are sold to private investors such as New Mexico Mortgage Finance 
Authority, Norwest Funding, Inc., and the Prudential Home Mortgage Company, 
Inc. with the servicing released.  The fee for selling loans with servicing 
released is generally 1/4% to 1 3/4%. The Bank generally retains the 
servicing on conventional loans sold to FNMA and receives a fee payable 
monthly of approximately 1/4% per annum of the unpaid balance of each loan.  
As of December 31, 1996, the Bank was servicing loans for others in the 
amount of approximately $44.8 million.  These loans are not reflected in the 
consolidated statement of financial condition.

ORIGINATIONS, PURCHASES AND SALES OF LOANS

    As described previously, the Bank originates loans through its marketing 
efforts, its existing customer base, walk-in customers, and real estate 
brokers and builders.  Commercial real estate loan originations are obtained 
by direct solicitation.  The Bank originates both adjustable-rate and 
fixed-rate loans. Its ability to originate loans is dependent upon the 
relative customer demand in the origination market which is affected by 
market conditions such as short-term and long-term interest rates as well as 
the expected future level of interest rates.

    The Bank made no purchases or sales of pooled whole loans in 1996 and had 
no commitments to purchase any loans or mortgage-backed securities at 
December 31, 1996.  At the same date, the Bank had loan origination 
commitments of $606,081 and commitments to sell residential loans of 
$564,361.  The Bank expects to continue to sell part of its residential 
mortgage loans in order to enhance liquidity and to maintain its risk-based 
capital position.  This has generally been the procedure since 1991.  When 
these loans are sold, the Bank usually retains the responsibility for 
servicing the loans.

                                       11

<PAGE>

    The following table sets forth the principal amount of the Bank's 
mortgage loan origination, purchase and sales activity for the periods 
indicated.

                                              Year Ended December 31
                                           --------------------------
                                             1996      1995      1994
                                           --------  --------   ------
                                              (Dollars in Thousands)
Originations by loan type
Fixed-rate:
    Construction loans...................   $ 2,026  $   766  $   934
    Conventional loans...................    14,581    6,113    6,470
    Loans refinanced.....................     4,331    1,676    6,040
Adjustable-rate:
    Conventional loans...................       612      794    1,792
    Loans refinanced.....................       207      703    1,565
                                            -------  -------   ------
        Total loans originated...........    21,757   10,052   16,801
                                            -------  -------   ------
Purchases:
    Loans purchased......................        --       --       --
                                            -------  -------   ------
Sales and repayments:
    Sales (1)............................     8,913    7,504   14,439
    Principal repayments.................     2,141    3,634    8,003
                                            -------  -------   ------
        Total reductions.................    11,054   11,138   22,442
                                            -------  -------   ------
Increase (decrease) in other items, net..       264      (62)     141
                                            -------  -------   ------
        Net increase (decrease)..........  $ 10,967  $(1,148) $(5,500)
                                            -------  -------   ------
                                            -------  -------   ------

(1) Consists entirely of one-to-four family fixed rate loans

ASSET QUALITY

    DELINQUENT LOANS.  When a borrower fails to make a required payment on a 
loan, the Bank attempts to cause the delinquency to be cured by contacting 
the borrower.  In the case of residential loans, a late notice is sent 16 
days after the due date.  If the delinquency is not cured by the thirtieth 
day, contact with the borrower is made by telephone or a letter is sent.  
Additional written and verbal contacts are made with the borrower between 35 
and 70 days after the due date.

    In the event a real estate loan payment is past due for 45 days or more, 
the Bank performs an in-depth review of the loan status, the condition of the 
property and circumstances of the borrower.  Based upon the results of its 
review, the Bank may negotiate and accept a repayment program with the 
borrower, accept a voluntary deed in lieu of foreclosure or when deemed 
necessary, initiate foreclosure proceedings.  If foreclosed on, real property 
is sold at a public sale and the Bank may bid on the property to protect its 
interest.  A decision as to whether and when to initiate foreclosure 
proceedings is based on such factors as the amount of the outstanding loan in 
relation to the original indebtedness, the extent of delinquency and the 
borrower's ability and willingness to cooperate in curing delinquencies.

    Delinquent consumer loans are handled in a generally similar manner, 
except that contacts are made beginning when the payment is 10 days past due. 
 If these efforts fail to bring the loan current, appropriate action may be 
taken to collect any loan payment that remains delinquent.  The Bank's 
procedures for repossession and 

                                       12
<PAGE>

sale of consumer collateral are subject to various requirements under New 
Mexico consumer protection laws.  Loans are generally placed on non-accrual 
status after 90 days delinquency or notice of bankruptcy.

    The following table sets forth the Bank's loan delinquencies by type, 
amount, and percentage of type at December 31, 1996.

<TABLE>
                                            Loans Delinquent For
                              -----------------------------------------------------       Total Loans Delinquent
                                      60-89 Days               90 Days And Over              60 Days or More 
                              -------------------------   -------------------------    --------------------------
                                                Percent                     Percent                      Percent
                                                of loan                     of loan                      of Loan
                              Number   Amount   category  Number   Amount   category   Number   Amount   category
                              ------   ------   --------  ------   ------   --------   ------   ------   --------
                                                            (Dollars in Thousands)
<S>                           <C>      <C>      <C>       <C>      <C>      <C>        <C>      <C>      <C>
Mortgage loans:
    One-to-four family.......      2    $ 83      0.31%      1      $ 53      0.20%        3     $ 136     0.51%
    Other dwelling units.....     --      --        --      --        --        --        --        --       --
    Commercial real estate...     --      --        --      --        --        --        --        --       --
Consumer loans...............      5      24      0.26      --        --        --         5        24     0.26
                                ----    ----      ----     ----     ----     -----      ----     -----   ------
Total loans..................      7    $107      0.23%      1      $ 53      0.11%        8     $ 160   ` 0.34%
                                ----    ----      ----     ----     ----     -----      ----     -----   ------
                                ----    ----      ----     ----     ----     -----      ----     -----   ------
</TABLE>

    NON-PERFORMING ASSETS.  Non-performing assets consist of loans on which 
interest is no longer being accrued, troubled debt restructurings, real 
estate acquired by foreclosure or deed-in-lieu of foreclosure and repossessed 
assets.

    The following table sets forth the amounts and categories of 
non-performing assets in the Bank's portfolio.  Loans are generally placed on 
non-accrual status after 90 days delinquency.

                                                           December 31
                                                 -----------------------------
                                                  1996        1995       1994
                                                 -------    --------   -------
                                                     (Dollars in Thousands)
Non-accrual loans (1).........................   $   53     $   --      $  148
Past due 90 days or more and still accruing...       --         --          37
Renegotiated loans (2)........................    1,573      1,573       3,145
Real estate owned (3).........................       86        114         421
                                                 ------     ------      ------
Total non-performing assets...................   $1,712     $1,687      $3,751
                                                 ------     ------      ------
                                                 ------     ------      ------
Ratio of non-performing assets to total asset.     1.60%      1.44%       2.98%
                                                 ------     ------      ------
                                                 ------     ------      ------

(1) Generally refers to loans that are contractually delinquent (i.e.,
    payments were due and unpaid for more than 90 days).

(2) The Bank's largest restructured note of approximately $1,573,000
    originated in 1987 for $2,000,000 as a permanent loan on a shopping center
    of 47,457 square feet, located on 56,943 square feet of land in Santa Fe,
    New Mexico. The terms of the note were modified in 1992 and an additional
    borrower was added to the loan. The interest rate of 5% in 1995 increased to
    6% in 1996 and escalates to 7% in 1997 with interest due monthly and
    principal reductions due at the end of each year. Final maturity is December
    1997. The loan was current and performing under the terms of the modified
    agreement at December 31, 1996.  However, the Bank is monitoring this loan
    and it is included in the table "Criticized Assets" listed as special 
    mention in this Item, due to the nature of the restructure.

(3) Refers to real estate acquired by the Bank through foreclosure or
    voluntary deed in lieu of loan foreclosure.


                                     13
<PAGE>

    For the year ended December 31, 1996, gross interest income which would
have been recorded had the non-accruing loans and renegotiated loans been
current in accordance with their original terms amounted to $132,563.  The
amount that was included in interest income on such loans was $119,377 for the
year ended December 31, 1996.

    CRITICIZED ASSETS.  Federal regulations provide for the classification of
loans and other assets, such as debt and equity securities considered by the OTS
to be of lesser quality, as "substandard," "doubtful" or "loss." An asset is
considered "substandard" if it is inadequately protected by the current net
worth and paying capacity of the obligor or of the collateral pledged, if any. 
"Substandard" assets include those characterized by the "distinct possibility"
that the insured institution will sustain "some loss" if the deficiencies are
not corrected. Assets classified as "doubtful" have all of the weaknesses
inherent in those classified "substandard," with the added characteristic that
the weaknesses present make "collection or liquidation in full," on the basis of
currently existing facts, conditions, and values, "highly questionable and
improbable."  Assets classified as "loss" are those considered "uncollectible"
and of such little value that their continuance as assets without the
establishment of a specific loss reserve is not warranted.  Assets which do not
currently expose the insured institution to sufficient risk to warrant
classification in one of the aforementioned categories, but possess weaknesses,
are required to be designated "special mention" by management.

    When an insured institution classifies problem assets as either substandard
or doubtful, it may establish general allowances for loan losses in an amount
deemed prudent by management.  General allowances represent loss allowances
which have been established to recognize the inherent risk associated with
lending activities, but which, unlike specific allowances, have not been
allocated to particular problem assets.  When an insured institution classifies
problem assets as loss, it is required either to establish a specific allowance
for losses equal to 100% of that portion of the asset so classified or to
charge-off such amount.  An institution's determination as to the classification
of its assets and the amount of its valuation allowances is subject to review by
the regulatory authorities, who may order the establishment of additional
general or specific loss allowances.

    In connection with the filing of its periodic reports with the OTS and in
accordance with its classification of assets policy, the Bank regularly reviews
the problem loans in its portfolio to determine whether any loans require
classification in accordance with applicable regulations.  Criticized assets of
the Bank at December 31, 1996 were as follows:

                                           December 31,
                                               1996
                                          --------------
                                          (In Thousands)

Substandard............................       $  443
Doubtful...............................           --
Loss...................................           --
                                          --------------
Total classified assets................          443
Special mention assets.................        3,193
                                          --------------
Total criticized assets................     $  3,636
                                          --------------
                                          --------------

    ALLOWANCE FOR LOAN LOSSES.  The allowance for loan losses is established
through a provision for loan losses based on management's quarterly asset
classification review and evaluation of the risk inherent in its loan portfolio
and changes in the nature and volume of its loan activity.  Such evaluation,
which includes a review of all loans of which full collectibility may not be
reasonably assured, considers among other matters, the estimated value of the
underlying collateral, economic conditions, cash flow analyses, historical loan
loss experience, 


                                     14
<PAGE>

discussions held with delinquent borrowers and other factors that warrant 
recognition in providing for an adequate loan allowance.  Although management 
believes it uses the best information available to make such determinations, 
future adjustments to reserves may be necessary, and net income could be 
significantly affected, if circumstances differ substantially from the 
assumptions used in making the initial determinations.  The Bank's quarterly 
asset classification review determines which loans to charge-off.

    The following table sets forth an analysis of the Bank's allowance for 
loan losses for the years indicated.

                                              Year ended December 31
                                  ---------------------------------------------
                                   1996      1995      1994      1993      1992
                                  ------    ------    ------    ------    ------
                                              (Dollars in Thousands)            
Balance at beginning of year....  $  428    $  461    $  509    $  535    $ 878
Provision charged (credited)....      14       (15)        4        21      386
Charge-offs:                                                                  
Mortgage loans:                                                              
    Single family...............      --        --       (50)      (33)     (53)
    Commercial real estate......      --        --        --        --     (649)
Consumer loans..................     (18)      (21)       (3)      (33)     (67)
Recoveries:
Mortgage loans:
    Single family...............       2        --        --        --       15
    Commercial real estate......      --        --        --        --       --
Consumer loans..................       3         3         1        19       25
                                  ------    ------    ------    ------   ------
Balances at end of year.........  $  429    $  428    $  461    $  509    $ 535
                                  ------    ------    ------    ------   ------
                                  ------    ------    ------    ------   ------
Ratio of net charge-offs during                                               
  the period to average loans                                                 
  outstanding during the period.     .03%      .05%      .14%      .11%    1.39%
                                  ------    ------    ------    ------   ------
                                  ------    ------    ------    ------   ------
Allowance for loan losses to                                                  
  non-performing loans, at the                                                
  end of the period.............   25.06%    25.37%    12.29%     8.23%    5.55%
                                  ------    ------    ------    ------   ------
                                  ------    ------    ------    ------   ------
Allowance for loan losses to                                                  
  total loans, at end of period.     .94%     1.25%     1.29%     1.38%    1.19%
                                  ------    ------    ------    ------   ------
                                  ------    ------    ------    ------   ------

                                       15

<PAGE>

INVESTMENT ACTIVITIES

    GENERAL.  The Bank has maintained high levels of investments that qualify 
as liquid assets under OTS regulations.  Liquidity may increase or decrease 
depending upon the availability of funds and comparative yields on 
investments in relation to the return on loans.  Historically, the Bank has 
maintained liquid assets at levels above the minimum requirements imposed by 
the OTS regulations and at levels believed adequate to meet the requirements 
of normal operations, including repayments of maturing debt and potential 
deposit outflows.  Cash flow projections are regularly reviewed and updated 
to assure that adequate liquidity is maintained.  For the month of December 
1996, the Bank's liquidity ratio (liquid assets as a percentage of net 
withdrawable savings deposits and current borrowings) was 19.27%.

    Federally chartered thrift institutions have the authority to invest in 
various types of liquid assets, including United States Treasury obligations, 
securities of various federal agencies, certain certificates of deposit of 
insured banks and savings institutions, certain bankers' acceptances, 
repurchase agreements and federal funds. Subject to various restrictions, 
federally chartered thrift institutions may also invest their assets in 
commercial paper, investment grade corporate debt securities and mutual funds 
whose assets conform to the investments that a federally chartered thrift 
institution is otherwise authorized to make directly.

    Generally, the investment policy of the Bank is to invest funds among 
various categories of investments and maturities based upon the Bank's 
asset/liability management policies, investment quality and marketability, 
liquidity needs and performance objectives.

    The Bank has a substantial portfolio of mortgage-backed securities. 
Historically, most of the Bank's mortgage-backed securities were long-term, 
fixed-rate federal agency securities.  In recent years, the Bank began to 
purchase other types of mortgage-backed securities consistent with its 
asset/liability management and balance sheet objectives.  In this regard, the 
Bank emphasizes the purchase of adjustable-rate or short or intermediate term 
fixed-rate mortgage-backed securities for asset/liability  management 
purposes and to supplement the Bank's origination of ARM loans.  At December 
31, 1996, approximately $25 million or 48% of the Bank's mortgage-backed 
securities carried adjustable rates of interest.  The Bank also has pooled 
fixed-rate loans in its existing loan portfolio to create mortgage-backed 
securities.  

    Under the OTS' risk-based capital requirements, GNMA mortgage-backed 
securities have a zero percent risk-weighting and FNMA, FHLMC and AA- or 
higher rated mortgage-backed securities have a 20% risk-weighting, in 
contrast to the 50% risk-weighting carried by performing one-to-four family 
residential mortgage loans.  None of the mortgage-backed securities held by 
the Bank had a risk-weight for regulatory capital purposes above 20%.

    All of the Bank's mortgage-backed securities are backed by FHLMC, GNMA or 
FNMA, or rated AA or higher.  Accordingly, management believes that the 
Bank's mortgage-backed securities generally are resistant to credit problems.

    The Bank's holdings of mortgage-backed securities have decreased in 
recent years primarily as a result of increase in the Bank's loan portfolio 
and, to a lesser extent, reduced levels of deposit portfolio.  FHLMC, GNMA 
and FNMA mortgage-backed securities generally carry a yield approximately 50 
to 100 basis points below that of the corresponding type of residential loan 
(due to the insurance or guarantee feature of such securities and the 
retention of a servicing spread by the loan servicer), and the Bank's other 
mortgage-backed securities also carry lower yields (because such securities 
tend to have shorter actual durations than 30-year loans).  The Bank will 
continue to evaluate mortgage-backed securities purchases and loan 
securitizations of its existing loans in the future based on its strategic 
and asset/liability objectives, market conditions and alternative investment 
opportunities.



                                      16
<PAGE>

    The following table sets forth the composition of the Bank's investment
portfolio at the dates indicated.

<TABLE>
                                                                       December 31
                                            --------------------------------------------------------------
                                                   1996                   1995                  1994
                                            ------------------     -----------------     -----------------
                                            Carrying      % of     Carrying     % of     Carrying     % of
                                              value      total       value     total       value     total
                                            --------    ------     --------   ------     --------    -----
                                                                 (Dollars in Thousands)
<S>                                         <C>         <C>        <C>        <C>        <C>         <C>
Available-for-sale: 
Mortgage-backed securities: 
    GNMA adjustable rate..................  $23,640     100.0%     $28,096     84.9%     $ 2,980     100.0%
Obligation of U.S. government agencies....       --        --        4,994     15.1           --        --
                                            -------     -----      -------    -----      -------     -----
         Total available-for-sale.........  $23,640     100.0%     $33,090    100.0%     $ 2,980     100.0%
                                            -------     -----      -------    -----      -------     -----
                                            -------     -----      -------    -----      -------     -----

Held-to-maturity: 
Mortgage-backed securities:
    FNMA participation certificates.......  $ 5,355      18.4%     $ 6,225     17.1%     $ 7,019       9.1%
    FHLMC participation certificates......   21,896      75.2       27,873     76.6       32,066      41.4
    FHLMC adjustable rate.................    1,862       6.4        2,306      6.3        2,650       3.4
    GNMA adjustable rate..................       --        --           --       --       28,782      37.1
Obligation of U.S. government agencies....       --        --           --       --        6,988       9.0
                                            -------     -----      -------    -----      -------     -----
         Total held-to-maturity...........   29,113     100.0%      36,404    100.0%      77,505     100.0%
                                            -------     -----      -------    -----      -------     -----
                                                        -----                 -----                  -----

FHLB stock................................    1,572                  1,483                 1,392
                                            -------                -------               -------

Other interest-earning assets: 
    Interest-bearing deposits with banks..      381                    476                   389
                                            -------                -------               -------

         Total............................  $54,706                $71,453               $82,266
                                            -------                -------               -------
                                            -------                -------               -------

Average remaining life or term to 
  repricing of investment securities 
  excluding other-interest-earning 
  assets and FHLB stock(1)................ 14 years               16 years              17 years
</TABLE>

---------------------
(1)  The average remaining lives of securities with "call" features are 
     calculated using the date of maturity.


    The following table sets forth the composition and contractual maturities 
of the Bank's investment securities.

<TABLE>
                                                           December 31, 1996
                                  ----------------------------------------------------------------------
                                                                                      Total investment 
                                                                                         securities
                                                                                     -------------------
                                   Within    1 to 5   5 to 10   10 to 20   Over 20   Amortized   Market
                                  one year   years     years     years      years      cost      value
                                  --------   ------   -------   --------   -------   ---------   -------
                                                         (Dollars in Thousands)
<S>                               <C>        <C>      <C>       <C>        <C>       <C>         <C>
Available-for-sale: 
Mortgage-backed securities:
    GNMA adjustable rate........  $     --   $   --   $    --   $  1,005   $22,833   $  23,838   $23,640
                                  --------   ------   -------   --------   -------   ---------   -------

         Total securities 
           available-for-sale...  $     --   $   --   $    --   $  1,005   $22,833   $  23,838   $23,640
                                  --------   ------   -------   --------   -------   ---------   -------
                                  --------   ------   -------   --------   -------   ---------   -------

Weighted average yield..........        --%      --%       --%      6.50%     6.63%       6.62%
                                  --------   ------   -------   --------   -------   ---------
                                  --------   ------   -------   --------   -------   ---------
</TABLE>


                                      17
<PAGE>


<TABLE>

                                                                     December 31, 1996
                                        -----------------------------------------------------------------------------
                                                                                                          Total      
                                                                                                        investment   
                                                                                                        securities  
                                                                                                 --------------------
                                          Within     1 to 5     5 to 10    10 to 20     Over 20  Amortized     Market
                                         one year     years      years       years       years      cost       value
                                         --------    -------    -------    --------     -------  ---------    -------
                                                                        (Dollars in Thousands)

<S>                                      <C>         <C>        <C>         <C>          <C>       <C>        <C>   
Held-to-maturity:       
Mortgage-backed securities:       
  FNMA participation certificates........ $ 4,314    $ 1,041    $    --     $    --      $   --    $ 5,355    $ 5,193
  FHLMC participation certificates.......   7,790     14,106         --          --          --     21,896     21,448
  FHLMC adjustable-rate certificates.....      --         --         --          --       1,862      1,862      1,829
                                          -------    -------    -------     -------      ------    -------    -------
                   
    Total securities held-to-maturity.... $12,104    $15,147    $    --     $    --      $1,862    $29,113    $28,470
                                          -------    -------    -------     -------      ------    -------    -------
                                          -------    -------    -------     -------      ------    -------    -------
Weighted average yield...................    5.25%      5.39%        --          --        5.89%      5.36% 
                                          -------    -------    -------     -------      ------    -------    
                                          -------    -------    -------     -------      ------    -------    

</TABLE>

    OTHER INVESTMENTS.  At December 31, 1996, the Bank's interest bearing 
deposits with banks was $380,570 or .4% of total assets.  As of such date, 
the Bank also had a $1,572,334 investment in FHLB stock, satisfying its 
requirement for membership in the FHLB of Dallas.  It is the Bank's general 
policy to purchase investment securities which are U.S. Government securities 
and federal agency obligations and other issues that are rated investment 
grade or have credit enhancements.  The Bank's investment securities 
portfolio at December 31, 1996 was entirely comprised of securities issued by 
the United States Government, or its agencies. 

SOURCES OF FUNDS

    THE COMPANY.  The Company's primary source of funds are dividends from 
the Bank, of which none have been paid to date, borrowings from the Bank in 
the form of advances ($269,357 at December 31, 1996), and outside borrowings.

    On February 12, 1997, the Company obtained a line of credit in the amount 
of $100,000 from a correspondent bank for six months at a market rate of 
interest, the funds of which are to be used for general corporate purposes.  
No borrowings under the line of credit have been made to date.

    THE BANK.  The Bank's primary sources of funds are deposits, amortization 
and prepayment of loan principal, sales or maturities of loans, investment 
securities, mortgage-backed securities and short-term investments, borrowings 
and funds provided from operations.

    Borrowing, predominantly from the FHLB of Dallas, may be used on a 
short-term basis to compensate for seasonal reductions in deposits or deposit 
inflows at less than projected levels, and may be used in the future on a 
longer-term basis to support lending and investing activities.

    The Bank offers a variety of deposit accounts having a wide range of 
interest rates and terms.  The Bank's deposits consist of statement savings, 
NOW accounts and money market accounts and CDs.  The Bank relies primarily on 
advertising, competitive pricing policies and customer service to attract and 
retain these deposits. The Bank solicits deposits from its primary market 
area only and does not use brokers to obtain deposits.

    The flow of deposits is influenced significantly by general economic 
conditions, changes in money market and prevailing interest rates and 
competition.  During the fiscal year ended December 31, 1996, total deposits 
decreased by approximately $12.5 million.  To maintain proper capital ratios 
and improve its net interest margin, management decided in 1995 to be less 
aggressive in bidding for public fund deposits and the decline in 



                                      18
<PAGE>

deposits is partially attributed to that strategic plan as well as 
management's overall strategy to change the product mix offered to its 
customers.  This policy continues to date.

    Management believes that customers continue to place a value on federal 
insurance on deposit accounts and that, to the extent the Bank maintains 
competitive rates, it will be able to maintain its deposit and liquidity 
levels. The Bank manages the pricing of its deposits in keeping with its 
asset/liability management and profitability objectives.

    Based on its experience, the Bank believes that its savings accounts, 
interest-bearing and non-interest-bearing checking accounts are relatively 
stable sources of deposits.  However, the ability of the Bank to attract and 
maintain CDs, and the rates paid on these deposits, has been and will 
continue to be significantly affected by market conditions.

    The following tables set forth the deposits in the various programs 
offered by the Bank at the dates indicated:

<TABLE>
                  Balance at                         Balance at                       Balance at                        Balance at
                 December 31,   % of     Increase     December    % of     Increase    December    % of      Increase    December
                    1996      deposits  (decrease)    31, 1995   deposits  (decrease)  31, 1994   deposits   (decrease)  31, 1993
                 -----------  --------  ---------- -  ---------  --------  ---------- ---------   --------   ---------- ----------
                                                                 (Dollars in Thousands)
<S>              <C>          <C>       <C>         <C>         <C>       <C>       <C>         <C>         <C>        <C>      
Transactional 
 accounts         $ 8,416       8.57%        453       7,963      7.19%   $   298   $  7,665       6.80%     $(1,882)  $  9,547
Jumbo CDs           7,722       7.87      (5,173)     12,895     11.66        (64)    12,959      11.49       (3,329)    16,288
Savings accounts    8,321       8.48        (960)      9,281      8.39     (1,979)    11,260       9.98       (3,078)    14,338
Money market 
 deposit accounts  10,511      10.71        (903)     11,414     10.32     (2,353)    13,767      12.21       (6,855)    20,622
IRA accounts        9,811       9.99        (512)     10,323      9.33         (4)    10,327       9.16         (737)    11,064
Other CDs          53,383      54.38      (5,374)     58,757     53.11      1,962     56,795      50.36       (2,036)    58,831
                  -------   --------    --------    --------   -------   --------   --------     ------     --------   -------- 
                  $98,164     100.00%   $(12,469)   $110,633    100.00%   $(2,140)  $112,773     100.00%    $(17,917)  $130,690
                  -------   --------    --------    --------   -------   --------   --------     ------     --------   -------- 
                  -------   --------    --------    --------   -------   --------   --------     ------     --------   -------- 

</TABLE>
 




                                      19


<PAGE>
<TABLE>
                                  December 31, 1996           December 31, 1995           December 31, 1994 
                             --------------------------- --------------------------- ---------------------------
                             Weighted                    Weighted                    Weighted                   
                             average          Percentage average          Percentage average          Percentage
Minimum                      interest          of total  interest          of total  interest          of total 
amount   Category              rate   Balance  deposits    rate   Balance  deposits    rate   Balance  deposits 
-------  -------------       -------- ------- ---------- -------- ------- ---------- -------- ------- ----------
<S>      <C>                 <C>      <C>     <C>        <C>      <C>     <C>        <C>      <C>      <C>      
                                                          (Dollars in Thousands)
$  100   Transactional                                                        
         accounts zero-rate    0.00%  $ 1,516     1.54%    0.00%  $    576    0.52%    0.00%  $    429    0.38%
   100   Transactional                                                                            
         accounts              1.63     6,900     7.03     2.47      7,387    6.68     2.90      7,236    6.42
 1,000   Money market          3.06     9,647     9.83     3.65     11,414   10.32     3.90     13,767   12.21
   100   Savings accounts      2.50     8,321     8.48     2.75      9,281    8.39     3.20     11,260    9.98
 2,500   Access money                                                                                           
         market                4.57       864     0.88       --         --      --       --         --      --  

         Certificates of                                                                                        
         Deposit                                                                                                
 1,000   30-60 day CDs         3.03       175     0.18     4.31        376    0.34     4.18        564    0.50
 1,000   91 day CDs            3.71     1,110     1.13     4.52      1,465    1.32     4.17      2,375    2.11
 1,000   6 month CDs           4.60    15,407    15.70     5.05     15,928   14.40     4.08     16,406   14.55
 1,000   1 year CDs            4.82    18,164    18.51     5.57     20,422   18.46     4.16     15,788   14.00
 1,000   18 month CDs          5.05     1,662     1.69     5.56      2,131    1.93     3.91      2,144    1.90
 1,000   2 year CDs            5.54     4,574     4.66     5.08      5,819    5.26     4.27      5,732    5.08
 1,000   30 month CDs          5.81     4,265     4.34     5.62      4,407    3.98     4.99      5,864    5.20
 1,000   3 year CDs            0.00        --     0.00     8.00          5    0.00     7.15         17    0.02
 1,000   4 year CDs            5.59     3,045     3.10     5.65      3,276    2.96     5.43      2,844    2.52
 1,000   5 year CDs            5.77     4,981     5.07     5.90      5,028    4.54     6.18      5,061    4.49
90,000   Jumbo CDs             5.01     7,722     7.87     5.67     12,795   11.57     4.62     12,959   11.49
   100   IRA floating rate     5.05     4,733     4.82     5.24      5,169    4.67     5.63      5,351    4.74
   100   1 year IRA            5.03     1,993     2.03     5.74      1,932    1.75     3.85      1,932    1.71
   100   3 year IRA            5.40     1,582     1.61     5.34      1,875    1.69     4.99      1,841    1.63
   100   5 year IRA            5.85     1,503     1.53     6.13      1,347    1.22     6.28      1,203    1.07
                               -----  -------   -------    -----  --------  -------    -----  --------  -------
                               4.31%  $98,164   100.00%    4.69%  $110,633  100.00%    3.65%  $112,773  100.00%
                               -----  -------   -------    -----  --------  -------    -----  --------  -------
                               -----  -------   -------    -----  --------  -------    -----  --------  -------
</TABLE>
    The following table sets forth the savings flows of the Bank during the 
periods indicated.  Net deposits (withdrawals) refer to the amount of 
deposits during a period less the amount of withdrawals during the same 
period.  Deposit flows at savings institutions may also be influenced by 
external factors such as governmental credit policies and, particularly in 
recent periods, depositors' perceptions of the adequacy of federal insurance 
of accounts.

                                                       Year Ended December 31
                                                     --------------------------
                                                       1996      1995     1994 
                                                     --------  -------- -------
                                                       (Dollars in Thousands)  
Net deposits (withdrawals) before interest 
  credited .........................................$(17,178) $(7,452) $(22,309)
Interest credited...................................   4,709    5,312     4,392
                                                    --------- -------- ---------
       Net decrease in savings deposits.............$(12,469) $(2,140) $(17,917)
                                                    --------- -------- ---------
                                                    --------- -------- ---------
Percent decrease.................................... (11.27)%  (1.90)%  (13.71)%

                                       20
<PAGE>

    The following table shows interest rate and maturity information for the
Bank's CDs as of December 31, 1996.

<TABLE>
                        0.00-      3.00-       5.00-      7.00-              Percent
                        2.99%      4.99%       6.99%      8.99%     Total    of total
                        -----     -------     -------     ----     -------   --------
                                           (Dollars in Thousands)
<S>                     <C>       <C>         <C>         <C>      <C>        <C>
Certificate accounts 
maturing in quarter 
ending:
--------------------

March 31, 1997........  $  26     $13,178     $ 8,255     $ 53     $21,512     30.33%
June 30, 1997.........     --      14,495       4,353       10      18,858     26.59
September 30, 1997....     --       5,269       3,938        5       9,212     12.99
December 31, 1997.....     --       5,724       3,514       --       9,238     13.03
March 31, 1998........     --         239       1,679       99       2,017      2.84
June 30, 1998.........     --       1,035       1,026       --       2,061      2.91
September 30, 1998....     --         288         562       41         891      1.26
December 31, 1998.....     --         425       1,377       --       1,802      2.54
March 31, 1999........     --         226         299      323         848      1.20
June 30, 1999.........     --          73         773       --         846      1.19
September 30, 1999....     --          26         550       --         576      0.81
December 31, 1999.....     --          14         517       --         531      0.75
Thereafter............     --          11       2,299      214       2,524      3.56
                        -----     -------     -------     ----     -------    ------
    Total               $  26     $41,003     $29,142     $745     $70,916    100.00%
                        -----     -------     -------     ----     -------    ------
                        -----     -------     -------     ----     -------    ------

    Percent of total       .0%       57.8%       41.1%     1.1%      100.0%
                        -----     -------     -------     ----     -------
                        -----     -------     -------     ----     -------
</TABLE>

    The following table indicates the amount of the Bank's CDs by size or from
public entities, by time remaining until maturity as of December 31, 1996.

<TABLE>
                                               Maturity
                             ---------------------------------------------
                                           Over       Over
                             3 months     3 to 6     6 to 12       Over
                             or less      months     months      12 months      Total
                             --------     -------    -------     ---------     -------
                                                   (In Thousands)
<S>                          <C>          <C>        <C>         <C>           <C>
CDs less than $100,000...... $18,162      $16,784    $16,486     $11,285       $62,717

CDs of $100,000 or more.....   2,850        2,016      1,964         811         7,641

Public funds(1).............     500           58         --          --           558
                             -------      -------    -------     -------       -------

Total CDs and public funds.. $21,512      $18,858    $18,450     $12,096       $70,916
                             -------      -------    -------     -------       -------
                             -------      -------    -------     -------       -------
</TABLE>
----------------------
(1) Certificates of deposit from government and other public entities.



                                      21
<PAGE>

    From time to time, the Bank has had greater amounts of public funds.  The 
amount of public funds held by the Bank at December 31, 1996 and 1995 was 
$726,268 and $2,792,186, respectively.  The Bank is required to pledge 
collateral against such funds equal to 100% of such funds.  

    BORROWINGS.  Although deposits are the Bank's primary source of funds, 
the Bank's policy has been to utilize borrowings when there is a net outflow 
of deposits, when advances are a less costly source of funds or when funds 
from advances can be invested at a positive spread.  In addition, the Bank 
has relied upon selected borrowings for short-term liquidity needs.

    The Bank may obtain advances from the FHLB of Dallas upon the security of 
its capital stock of the FHLB of Dallas and certain of its mortgage loans, 
investment securities and mortgage-backed securities.  Such advances may be 
made pursuant to several different credit programs, each of which has its own 
interest rate and range of maturities.  At December 31, 1996, the Bank had 
$3,000,000 of FHLB borrowings outstanding.

    During fiscal 1996, the Bank  utilized advances from FHLB of Dallas to 
cover net deposit outflows and, to a lesser extent, partially fund mortgage 
loans.

    The following table sets forth maximum balance, average balance, and 
average rate paid on FHLB advances for the period indicated.

                                                       Year ended December 31
                                                   ----------------------------
                                                     1996      1995       1994
                                                   -------   --------  --------
                                                       (Dollars in Thousands)

Maximum amount of borrowings outstanding  . . . .  $ 3,900   $ 7,400   $ 11,600

Approximate average borrowings outstanding  . . .  $   459   $ 1,305   $  5,038

Approximate weighted average interest rate paid .     5.38%     6.13%      4.92%


SUBSIDIARY OF THE BANK

    In 1974, the Bank incorporated First Equity Development Corporation 
("FEDCO"), a New Mexico corporation, as a wholly-owned subsidiary of the 
Bank. The directors and officers of FEDCO also serve as officers of the Bank. 
Prior to 1991, FEDCO's primary business was real estate acquisition, 
development and construction, and investment in the Bank's former data 
processing service bureau.  FEDCO had $1,697 in cash at December 31, 1996 and 
1995, and no other assets or liabilities and is currently an inactive 
corporation.  Thrift institutions are permitted to invest an amount equal to 
2% of their assets, through a subsidiary, with an additional investment of 1% 
of assets where such investment serves primarily community, inner-city and 
community development purposes.

REGULATION

    GENERAL.  The Bank is subject to extensive regulation, examination and
supervision by the OTS, as its chartering agency, and the FDIC, as its deposit
insurer.  The Bank's deposit accounts are insured up to applicable limits by the
SAIF administered by the FDIC, and it is a member of the FHLB of Dallas.  The
Bank must file reports with the OTS and the FDIC concerning its activities and
financial condition, and it must obtain regulatory approvals prior to entering
into certain transactions, such as mergers with, or acquisitions of, other
depository institutions.  The OTS and the FDIC conduct periodic examinations to
assess the Bank's compliance with various regulatory requirements.  Such
regulation and supervision establish a comprehensive framework of activities in
which an institution may engage and are intended primarily for the protection of
the insurance fund and depositors.  The Company, as a unitary thrift holding
company, is required to file certain reports with, and otherwise comply with,
the rules and regulations of the OTS and of the Securities and Exchange
Commission ("Commission") under the federal securities laws.

                                       22
<PAGE>

    The OTS and the FDIC have significant discretion in connection with their 
supervisory and enforcement activities and examination policies, including 
policies with respect to the classification of assets and the establishment 
of adequate loan loss reserves for regulatory purposes.  Any change in such 
regulation and policies, whether by the OTS, the FDIC or action of the United 
States Congress, could have a material adverse impact on the Company, the 
Bank and the operations of both.

    In 1992, the Bank was deemed to be undercapitalized by the OTS and agreed 
to the issuance in July 1993 of a Prompt Corrective Action Directive, which 
was amended in August 1994.  The directive required the Bank to submit a 
capital restoration plan to the OTS, prescribed restrictions on dividends, 
management fees, asset growth, branching and other matters and established 
increased capital levels for the Bank.  The Bank is currently in compliance 
with the provisions of the directive.  The Bank entered into a Supervisory 
Agreement with the OTS effective as of June 17, 1996.  The Supervisory 
Agreement provides for the Bank to increase its core capital position to 6% 
by December 31, 1996 and to a level of 7% no later than June 30, 1997.  The 
6% requirement at December 31, 1996 was subsequently waived by the OTS in 
November 1996.  To comply with certain other terms of the Supervisory 
Agreement, the Board of Directors of the Bank appointed outside directors to 
the Bank's Asset/Liability and Investment Committee, revised its business and 
capital plan and reports quarterly on variances of actual results to budgeted 
projections.  

    REGULATION OF THE COMPANY.  The Company, as a unitary thrift holding 
company, is a savings and loan holding company within the meaning of HOLA.  
As such, the Company is required to register with the OTS and is subject to 
OTS regulations, examinations, supervision and reporting requirements.  In 
addition, the OTS has enforcement authority over the Company and its 
non-thrift subsidiaries, if any.  Among other things, this authority permits 
the OTS to restrict or prohibit activities that are determined to be a 
serious risk to the financial safety, soundness or stability of a subsidiary 
savings association.

    Except under limited circumstances, thrift holding companies are 
prohibited from acquiring, without prior approval of the OTS, control of any 
other savings institutions or thrift holding company or substantially all the 
assets thereof or more than five percent of the voting shares of a thrift 
institution or holding company thereof which is not a subsidiary.  In 
evaluating an application by a holding company to acquire a thrift 
association, the OTS must consider the financial and managerial resources and 
future prospects of the company and thrift association involved, the effect 
of the acquisition on the risk to the insurance funds, the convenience and 
needs of the community and competitive factors.  Acquisitions which result in 
a thrift holding company controlling thrift associations in more than one 
state are generally prohibited except in supervisory transactions involving 
failing savings associations or based on specific state authorization to 
permit such acquisitions.

    Federal law also requires OTS approval prior to any change of control of 
the Company or the Bank. Under OTS regulations, "control" is presumed to 
exist if an individual or company acquires more than twenty-five percent of 
any class of voting stock of a thrift association or holding company.  
Control is also presumed to exist, subject to being rebutted, if a person 
acquires more than ten percent of any class of voting stock (or more than 
twenty-five percent of any class of non-voting stock) and is subject to any 
of several control factors, including, among other matters, the relative 
ownership position of a person, the existence of control agreements and other 
factors.

    As a unitary thrift holding company, the Company generally will not be 
restricted under existing laws to the types of business activities in which 
it may engage, provided that the Bank continues to satisfy the QTL test. Upon 
any non-supervisory acquisition by the Company of another thrift or savings 
bank that meets the QTL test and is deemed to be a savings association by the 
OTS and that will be held as a separate subsidiary, the Company would become 
a multiple thrift holding company and would be subject to limitations on the 
types of business activities in which it could engage.  HOLA generally limits 
the activities of a multiple thrift holding company and its non-insured 
association subsidiaries primarily to activities permissible for bank holding 
companies under the Bank Holding Company Act, subject to the prior approval 
of the OTS, and to other activities authorized by OTS regulation.  

                                       23
<PAGE>

    A thrift association or a thrift holding company is required to give 30 
days prior written notice to the OTS of any proposed appointment of a 
director or senior executive officer if the institution has been chartered 
less than two years, has undergone a change in control within the preceding 
two years, or is not in compliance with the minimum capital requirements or 
otherwise is in a troubled condition.  The OTS then has the opportunity to 
disapprove any such appointment.

    Transactions between the Bank and the Company and its other subsidiaries 
are subject to various conditions and limitations.  The Bank will be required 
to give 30 days written notice to the OTS prior to any declaration of the 
payment of any dividends or other capital distributions to the Company.

    FEDERAL SECURITIES LAW.  The stock of the Company is registered with the 
Commission under the Exchange Act ("Exchange Act").  The Company is subject 
to the information, proxy solicitation, insider trading restrictions and 
other requirements of the Commission under the Exchange Act.

    Company stock held by persons who are affiliates (generally officers, 
directors and principal stockholders) of the Bank may not be resold without 
registration or unless sold in accordance with certain resale restrictions.  
If the Company meets specified current public information requirements, each 
affiliate of the Company is able to sell in the public market, without 
registration, a limited number of shares in any three-month period.

    INSURANCE OF ACCOUNTS AND REGULATIONS BY THE FDIC.  The Bank is a member 
of the SAIF, which is administered by the FDIC.  Deposits are insured up to 
applicable limits by the FDIC and such insurance is backed by the full faith 
and credit of the United States Government.  As insurer, the FDIC imposes 
deposit insurance premiums and is authorized to conduct examinations of and 
to require reporting by FDIC-insured institutions.  It also may prohibit any 
FDIC-insured institution from engaging in any activity the FDIC determines by 
regulation or order to pose a serious risk to the FDIC.  The FDIC also has 
the authority to initiate enforcement actions against thrift associations, 
after giving the OTS an opportunity to take such action, and may terminate 
the deposit insurance if it determines that the institution has engaged or is 
engaging in unsafe or unsound practices, or is in an unsafe or unsound 
condition.

    Federal law also required the FDIC to implement a risk-based deposit 
insurance assessment system. Pursuant to this requirement, the FDIC adopted a 
transitional risk-based assessment system, effective January 1, 1993, under 
which all insured thrift institutions are placed into one of nine categories 
and assessed insurance premiums, ranging from .0% to .27% of deposits, based 
upon their level of capital and supervisory evaluation. The permanent system, 
adopted in June 1993 and effective January 1, 1994, continued the risk 
classification system established under the transitional rule.  Under the 
system institutions classified as well capitalized [i.e., a core capital ratio 
of at least 5%, a ratio of Tier 1 or core capital to risk-weighted assets 
("Tier 1 risk-based capital") of at least 6% and a risk-based capital ratio 
of at least 10%]and considered healthy would pay the lowest premiums while 
institutions that are less than adequately capitalized (i.e., core and Tier 1 
risk-based capital ratios of less than 4% or a risk-based capital ratio of 
less than 8%) and considered of substantial supervisory concern would pay the 
highest premium. Risk classification of all insured institutions will be made 
by the FDIC for each semi-annual assessment period.

    The FDIC is authorized to increase assessment rates, on a semi-annual 
basis, if it determines that the reserve ratio of the SAIF will be less than 
the designated reserve ratio of 1.25% of SAIF insured deposits.  In setting 
these increased assessments, the FDIC must seek to restore the reserve ratio 
to that designated reserve level, or such higher reserve ratio as established 
by the FDIC.  In addition, under the FDICIA, the FDIC may impose special 
assessments on SAIF members to repay amounts borrowed from the United States 
Treasury for any other reason deemed necessary by the FDIC.

    As is the case with the SAIF, the FDIC is authorized to adjust the 
insurance premium rates for banks that are insured by the BIF of the FDIC in 
order to maintain the reserve ratio of the BIF at 1.25% of BIF insured 
deposits. The FDIC's premium schedule provides a charge on deposits so that 
well-capitalized and healthy banks will pay the lowest premiums.

                                       24
<PAGE>

    On September 30, 1996, EGRPRA was passed.  The EGRPRA contains a 
comprehensive approach to recapitalize the SAIF and assure payment of the 
FICO obligations.  A key provision of Subtitle G of EGRPRA imposed a special 
assessment on SAIF assessable deposits held in the Bank as of March 31, 1995. 
The "Special SAIF Assessment Statement" received by the Bank was for 
$761,686, which represented a charge of .006570 on an Assessment Deposit Base 
of $115,933,923 as of March 31, 1995.  This charge was accrued by the Bank as 
an Insurance Fund Expense in the third quarter ending September 30, 1996.  
The charge was paid November 27, 1996.

    Other key provisions of SAIF/FICO reform are summarized as follows:

    -    The FICO obligation is to be shared by the SAIF and BIF insured
         institutions beginning January 1, 1997;
    -    The BIF and SAIF are to be merged into a new DIF effective January 1, 
         1999, if saving associations do not exist; 
    -    Creation of SAIF Special Reserve;
    -    Refund of amounts in DIF in excess of Designated Reserve Amount;
    -    Assessment Rates for SAIF members may not be less than Assessment
         Rates for BIF members;
    -    Assessments authorized only if needed to maintain the reserve ratio of
         the Deposit Insurance Fund;
    -    The Secretary of Treasury is to report to Congress by March 31, 1997 on
         issues relevant to a common depository institution charter;
    -    The Special Assessments may be deducted as a trade or business expense
         in the year paid.

    In addition, the law significantly expands the authority of the Bank to
make consumer and commercial loans.  The primary changes are as follows:

    -    To permit credit card loans to count as qualified thrift investments
         without QTL limits;
    -    To permit education loans to be made without QTL limits;
    -    To increase the current 10% of asset limit to 20% on a commercial
         loans;
    -    To expand other consumer loans (excluding credit card and education 
         loans) QTL limits from 10% to 20%;
    -    To expand interstate branching if QTL test is met and if a state thrift
         from the federal thrift's home state could branch into that other
         state.

    REGULATORY CAPITAL REQUIREMENTS.  Federally insured thrift associations, 
such as the Bank, are required to maintain a minimum level of regulatory 
capital.  The OTS has established capital standards, including a tangible 
capital requirement, a leverage ratio (or core capital) requirement and a 
risk-based capital requirement applicable to such thrift associations.  These 
capital requirements must be generally as stringent as the comparable capital 
requirements for national banks.  The OTS is also authorized to impose 
capital requirements in excess of these standards on individual associations 
on a case-by-case basis.

    The capital regulations require tangible capital of at least 1.5% of 
adjusted total assets (as defined by regulation).  Tangible capital generally 
includes common stockholders' equity and retained income, and certain 
noncumulative perpetual preferred stock and related income.  In addition, all 
intangible assets, other than a limited amount of purchased mortgage 
servicing rights, must be deducted from tangible capital.

    The OTS regulations establish special capitalization requirements for 
thrift associations that own subsidiaries.  Under these regulations certain 
subsidiaries are consolidated for capital purposes and others are excluded 
from assets and capital.  In determining compliance with the capital 
requirements, all subsidiaries engaged solely in activities permissible for 
national banks or engaged in certain other activities solely as agent for its 
customers are "includable" subsidiaries that are consolidated for capital 
purposes in proportion to the association's level of ownership, including the 
assets of includable subsidiaries in which the association has a minority 
interest that is not consolidated for generally accepted accounting 
principles ("GAAP") purposes. For excludable subsidiaries, the debt and 
equity investments in such subsidiaries are deducted from assets and capital, 
with a five-year transition period beginning on July 1, 1990, for investments 
made before April 12, 1989. 

                                      25
<PAGE>

At December 31, 1996, the Bank had tangible capital of $5,295,531 or 4.95% of 
adjusted total assets, which was $3,689,970 above the minimum requirement of 
1.5% of adjusted total assets in effect on that date.

    The capital standards also require core capital equal to at least 3% of 
adjusted total assets (as defined by regulation).  Core capital generally 
consists of tangible capital plus certain intangible assets, including a 
limited amount of purchased credit card relationships.  As a result of the 
prompt corrective action provisions discussed below, however, a thrift 
association must maintain a core capital ratio of at least 4% to be 
considered adequately capitalized unless its supervisory condition is such to 
allow it to maintain a 3% ratio.  At December 31, 1996, the Bank had no 
intangibles which were subject to these tests.

    As required by federal law, the OTS has proposed a rule revising its 
minimum core capital requirement to be no less stringent than that imposed on 
national banks.  The OTS has proposed that only those thrift associations 
rated as a composite one (the highest rating) under their rating system will 
be permitted to operate at or near the regulatory minimum leverage ratio of 
3%. All other thrift associations will be required to maintain a minimum 
leverage ratio of 4% to 5%.  The OTS will assess each individual thrift 
association through the supervisory process on a case-by-case basis to 
determine the applicable requirement.  No assurance can be given as to the 
final form of any such regulation, the date of its effectiveness or the 
requirement applicable to the Bank.

    At December 31, 1996, the Bank had core capital equal to $5,295,531 or 
4.95% of adjusted total assets, which was $2,084,410 above the minimum 
leverage ratio requirement of 3% as in effect on that date.

    The OTS risk-based requirement requires thrift associations to have total 
capital of at least 8% of risk-weighted assets.  Total capital consists of 
core capital, as defined above, and supplementary capital. Supplementary 
capital consists of certain permanent and maturing capital instruments that 
do not qualify as core capital and general valuation loan and lease loss 
allowances up to a maximum of 1.25% of risk-weighted assets. Supplementary 
capital may be used to satisfy the risk-based requirement only to the extent 
of core capital.  The OTS is also authorized to require a thrift association 
to maintain an additional amount of total capital to account for 
concentration of credit risk and the risk of non-traditional activities.  At 
December 31, 1996, the Bank had no capital instruments that qualify as 
supplementary capital.  In addition, general loss reserves at that date were 
less than 1.25% of risk-weighted assets.

    Certain exclusions from capital and assets are required to be made for 
the purpose of calculating total capital.  Such exclusions consist of equity 
investment (as defined by regulation) and that portion of land loans and 
nonresidential construction loans in excess of an 80% loan-to-value ratio and 
reciprocal holdings of qualifying capital instruments.  The Bank had no such 
exclusions from capital and assets at December 31, 1996.

    In determining the amount of risk-weighted assets, all assets, including 
certain off-balance sheet items, will be multiplied by a risk weight, ranging 
from 0% to 100%, based on the risk inherent in the type of asset.  For 
example, the OTS has assigned a risk weight of 50% for prudently underwritten 
permanent one-to-four family first lien mortgage loans not more than 90 days 
delinquent and having a loan to value ratio of not more than 80% at 
origination unless insured to such ratio by an insurer approved by the FNMA 
or FHLMC.

    At December 31, 1996, the Bank had risk-based capital of $5,724,772 or 
13.47% of risk-weighted assets. This amount was $2,323,572 above the 8% 
requirement in effect on that date.

    The OTS has adopted a final rule that requires every thrift association 
with more than normal interest rate risk to deduct from its total capital, 
for purposes of determining compliance with such requirement, an amount equal 
to 50% of its interest rate risk exposure multiplied by the present value of 
its assets.  This exposure is a measure of the potential decline in the net 
portfolio value of a thrift association, greater than 2% of the present value 
of its assets, based upon a hypothetical 200 basis point increase or decrease 
in interest rates (whichever results in a greater decline).  Net portfolio 
value is the present value of expected cash flows from assets, liabilities 
and off-balance sheet contracts.  The rule provides for a two quarter lag 
between calculating interest rate risk and recognizing any deduction from 
capital.  Any thrift association with less than $300 million in assets and a 
total capital ratio in excess of 12% is exempt from this requirement unless 
the OTS determines 

                                      26
<PAGE>

otherwise.  The first time thrift institutions will be required to 
incorporate interest rate risk into their risk-based capital calculations is 
undetermined for regulatory reporting purposes.  Based upon financial data as 
of December 31, 1996, management believes that compliance with the new 
interest rate risk measure will not have a material impact on the Bank's 
risk-based capital position.

    The OTS and the FDIC are authorized and, under certain circumstances 
required, to take certain actions against thrift associations that fail to 
meet their capital requirements.  The OTS is generally required to take 
action to restrict the activities of an "undercapitalized association" 
(generally defined to be one with less than either a 4% core capital ratio, a 
4% Tier 1 risked-based capital ratio or an 8% risk-based capital ratio).  Any 
such association must submit a capital restoration plan and until such plan 
is approved by the OTS may not increase its assets, acquire another 
institution, establish a branch or engage in any new activities, and 
generally may not make capital distributions.  The OTS is authorized to 
impose the additional restrictions, discussed below, that are applicable to 
significantly undercapitalized associations.

    As a condition to the approval of the capital restoration plan, any 
company controlling an undercapitalized association must agree that is will 
enter into a limited capital maintenance guarantee with respect to the 
institution's achievement of its capital requirements.

    Any thrift association that fails to comply with its capital plan or is 
"significantly undercapitalized" (i.e., Tier 1 risk-based or core capital 
ratios of less than 3% or a risk-based capital ratio of less than 6%) must be 
made subject to one or more of additional specified actions and operating 
restrictions.  These actions and restrictions include requiring the issuance 
of additional voting securities; limitations on asset growth; mandated asset 
reduction; changes in senior management; divestiture, merger or acquisition 
of the association; restrictions on executive compensation; and any other 
action the OTS deems appropriate.  An association that becomes "critically 
undercapitalized" (i.e., a tangible capital ratio of 2% or less) is subject 
to further mandatory restrictions on its activities in addition to those 
applicable to significantly undercapitalized associations.  In addition, the 
OTS must appoint a receiver (or conservator with the concurrence of the FDIC) 
for a thrift association, with certain limited exceptions, within 90 days 
after it becomes critically undercapitalized.

    Any undercapitalized association is also subject to other possible 
enforcement actions by the OTS or the FDIC.  Such actions could include a 
capital directive, a cease-and-desist order, civil money penalties, the 
establishment of restrictions on all aspects of the Bank's operations or the 
appointment of a receiver or conservator or a forced merger into another 
institution.

    If the OTS determines that an association is in an unsafe or unsound 
condition or is engaged in an unsafe or unsound practice, it is authorized to 
reclassify a well-capitalized association as an adequately capitalized 
association and if the association is adequately capitalized, to impose the 
restrictions applicable to an undercapitalized association.  If the 
association is undercapitalized, the OTS is authorized to impose the 
restrictions applicable to a significantly undercapitalized association.

    The imposition by the OTS or the FDIC of any of these measures on the 
Bank may have a substantial adverse effect on the Company's operations and 
profitability.  The Company's shareholders do not have preemptive rights, and 
therefore, if the Bank is directed by the OTS or the FDIC to issue additional 
shares of Common Stock, such issuance may result in the dilution in the 
percentage of ownership of the Bank.

    LIMITATIONS ON DIVIDENDS AND OTHER CAPITAL DISTRIBUTIONS.  OTS 
regulations impose various restrictions on thrift associations with respect 
to their ability to make distributions of capital, which include dividends, 
stock redemptions or repurchases, cash-out mergers and other transactions 
charged to the capital account.  OTS regulations also prohibit a thrift 
association from declaring or paying any dividends or from repurchasing any 
of its stock if, as a result, the regulatory capital of the association would 
be reduced below the amount required to be maintained for the liquidation 
account established in connection with its mutual to stock conversion.  

    Generally, thrift associations, such as the Bank, that before and after 
the proposed distribution meet their capital requirements, may make capital 
distributions during any calendar year equal to the greater of 100% of net 

                                      27
<PAGE>

income for the year-to-date plus 50% of the amount by which the lesser of the 
association's tangible, core or risk-based capital exceeds its capital 
requirement for such capital component, as measured at the beginning of the 
calendar year, or requirement for such capital component, as measured at the 
beginning of the calendar year, or 75% of its net income for the most recent 
four quarter period.  However, an association deemed to be in need of more 
than normal supervision by the OTS may have its dividend authority restricted 
by the OTS.  The Bank may pay dividends in accordance with this general 
authority.

    Thrift associations proposing to make any capital distributions need only 
submit written notice to the OTS 30 days prior to such distribution.  Thrift 
associations that do not, or would not meet their current minimum capital 
requirements following a proposed capital distribution, however, must obtain 
OTS approval prior to making such distribution.  The OTS may object to the 
distribution during that 30 day period notice based on safety and soundness 
concerns.  

    The OTS has proposed regulations that would revise the current capital 
distribution restrictions.  Under the proposal a thrift association may make 
a capital distribution without notice to the OTS (unless it is a subsidiary 
of a holding company) provided that it has a CAMEL 1 or 2 rating, is not of 
supervisory concern and would remain adequately capitalized (as defined in 
the OTS prompt corrective action regulations) following the proposed 
distribution. Thrift associations that would remain adequately capitalized 
following the proposed distribution but do not meet the other noted 
requirements must notify the OTS 30 days prior to declaring a capital 
distribution.  The OTS stated it will generally regard as permissible that 
amount of capital distributions that do not exceed 50% of the institution's 
excess regulatory capital plus net income to date during the calendar year.  
A thrift association may not make a capital distribution without prior 
approval of the OTS and the FDIC if it is undercapitalized before, or as a 
result of, such a distribution.  As under the current rule, the OTS may 
object to a capital distribution if it would constitute an unsafe or unsound 
practice.  No assurance may be given as to whether or in what form the 
regulations may be adopted.

    LIQUIDITY.  All thrift associations, including the Bank, are required to 
maintain an average daily balance of liquid assets equal to a certain 
percentage of the sum of its average daily balance of net withdrawable 
deposit accounts and borrowings payable in one year or less.  This liquid 
asset ratio requirement may vary from time to time (between 4% and 10%) 
depending upon economic conditions and savings flows of all thrift 
associations.  At the present time, the minimum liquid asset ratio is 5%.

    In addition, short-term liquid assets (i.e., cash, certain time deposits, 
certain bankers acceptances and short-term United States Treasury 
obligations) currently  must constitute at least 1% of the association's 
average daily balance of net withdrawable deposit accounts and current 
borrowings.  Penalties may be imposed upon associations for violations of 
either liquid asset ratio requirement.  At December 31, 1996, the Bank was in 
compliance with both requirements, with an overall liquid asset ratio of 
19.27% and short-term liquid assets ratio of 2.84%.

    ACCOUNTING.  An OTS policy statement applicable to all savings 
associations clarifies and re-emphasizes that the investment activities of a 
thrift association must be in compliance with approved and documented 
investment policies and strategies, and must be accounted for in accordance 
with GAAP. Under the policy statement, management must support its 
classification of and accounting for loans and securities (i.e., whether held 
for investment, sale or trading) with appropriate documentation.  The Bank is 
in compliance with this policy statement.

    The OTS had adopted an amendment to its accounting regulations to require 
that transactions  be reported in a manner that best reflects their 
underlying economic substance and inherent risk and that financial reports 
must incorporate any other accounting regulations or orders prescribed by the 
OTS.  Such regulations may result in reporting transactions in a manner that 
is more stringent than may be required by GAAP.

    QUALIFIED THRIFT LENDER TEST.  All thrift associations, including the 
Bank, are required to meet a QTL test to avoid certain restrictions on their 
operations.  The HOLA sets specific limits on the types and amounts of loans 
that federal thrift associations may make.  Prior to the enactment of EGRPRA, 
commercial, corporate, 

                                      28
<PAGE>

business, or agricultural loans were limited in the aggregate to 10% of a 
thrift's assets; education loans were limited to 5% of a thrift's assets; 
and, in general, qualified thrift investments (I.E., housing related 
investments) had to equal 65% of the thrift's portfolio assets for the thrift 
to be deemed a QTL.  EGRPRA amended the HOLA to provide that a federal thrift 
association is a QTL if it qualifies as a domestic building and loan 
association as defined by the Internal Revenue Code or meets the QTL test 
outlined in the HOLA.  The amendment further permits federal thrift 
associations to invest in, sell or otherwise deal in education and credit 
card loans without limitation, and raises from 10 to 20% of total assets the 
aggregate amount of commercial, corporate, business, or agricultural loans or 
investments that may be made by a thrift but requires that amounts in excess 
of 10% of total assets must be used only for small business loans.  In 
addition, "qualified thrift investment" is defined to include, without limit, 
education, small business, and credit card loans; and removes the 10% limit 
on personal, family or household loans for purposes of the QTL test.  At 
December 31, 1996, the Bank met the QTL test and has always met the test 
since its inception.

    Any thrift association that fails to meet the QTL test must convert to a 
national bank charter, unless it requalifies as a QTL and thereafter remains 
a QTL.  Requalification as a QTL is restricted to one time only.  If an 
association does not requalify and converts to a national bank charter, it 
must remain SAIF-insured until the FDIC permits it to transfer to the BIF.  
If an association that fails the test has not yet requalified and has not 
converted to a national bank, its new investments and activities are limited 
to those permissible for both a thrift association and a national bank, and 
it is limited to national bank branching rights in its home state.  In 
addition, the association is immediately ineligible to receive any new FHLB 
borrowings and is subject to national bank  limits for payment of dividends.  
If such association has not requalified or converted to a national bank 
within three years after the failure, it must divest of all investments and 
cease all activities not permissible for a national bank.  In addition, it 
must repay promptly any outstanding FHLB borrowings, which may result in 
prepayment penalties.  If any association that fails the QTL test is 
controlled by a holding company, then within one year after the failure, the 
holding company must register as a bank holding company and become subject to 
all restrictions on bank holding companies.

    COMMUNITY REINVESTMENT ACT.  Under the CRA, every FDIC insured 
institution has a continuing and affirmative obligation consistent with safe 
and sound banking practices to help meet the credit needs of its entire 
community, including low and moderate income neighborhoods.  The CRA does not 
establish specific lending requirements or programs for financial 
institutions nor does it limit an institution's discretion to develop the 
types of products and services that it believes are best suited to its 
particular community, consistent with the CRA.  The CRA requires the OTS, in 
connection with the examination of the Bank, to assess the institution's 
record of meeting the credit needs of its community and to take such record 
into account in its evaluation of certain applications, such as a merger or 
the establishment of a branch, by the Bank. An unsatisfactory rating may be 
used as the basis for the denial of an application by the OTS.  The most 
recent CRA examination as of September 30, 1996 classified the Bank as 
satisfactory.

    The federal banking agencies, including the OTS, have recently revised 
the CRA regulations and the methodology for determining an institution's 
compliance with the CRA.  Due to the heightened attention being given to the 
CRA in the past few years, the Bank may be required to devote additional 
funds for investment and lending in its local community.

    TRANSACTIONS WITH AFFILIATES.  Generally, transactions between a thrift 
association or its subsidiaries and its affiliates are required to be on 
terms as favorable to the association as transactions with non-affiliates.  
In addition, certain of these transactions, such as loans to an affiliate, 
are restricted to a percentage of the association's capital.  Affiliates of 
the Bank include the Company and any company which is under common control 
with the Bank. In addition, a thrift association may not lend to any 
affiliate engaged in activities not permissible for a bank holding company or 
acquire the securities of most affiliates.  The OTS has the discretion to 
treat subsidiaries of thrift associations as affiliates on a case-by-case 
basis.

                                      29
<PAGE>

    Certain transactions with directors, officers of controlling persons are 
also subject to conflict of interest regulations enforced by the OTS.  These 
conflict of interest regulations and other statutes also impose restrictions 
on loans to such persons and their related interests.  Among other things, 
such loans must be made on terms substantially the same as for loans to 
unaffiliated individuals.  At December 31, 1996, loans to directors and 
officers of the Bank were $315,605.

    FEDERAL HOME LOAN BANK SYSTEM.  The Bank is a member of the FHLB of 
Dallas which is one of 12 regional FHLBs that administer the home financing 
credit function of thrift associations.  Each FHLB serves as a reserve or 
central bank for its members within its assigned region.  It is funded 
primarily from proceeds derived from the sale of consolidated obligations of 
the FHLB System. It makes loans to members (i.e., advances) in accordance 
with policies and procedures established by the board of directors of the 
FHLB.  These policies and procedures are subject to the regulation and 
oversight of the Federal Housing Finance Board.  All advances from the FHLB 
are required to be fully secured by sufficient collateral as determined by 
the FHLB.  In addition, all long-term advances are required to provide funds 
for residential home financing.

    Under federal law, the FHLBs are required to provide funds for the 
resolution of troubled thrift associations and to contribute to low- and 
moderately-priced housing programs through direct loans or interest subsidies 
on advances targeted for community investment and low- and moderate-income 
housing projects. These contributions have affected adversely the level of 
FHLB dividends paid and could continue to do so in the future.  These 
contributions could also have an adverse effect on the value of FHLB stock in 
the future.  A reduction in value of the Bank's FHLB stock may result in a 
corresponding reduction in the Bank's capital.

    As a member, the Bank is required to purchase and maintain stock in the 
FHLB of Dallas.  At December 31, 1996, the Bank had $1,572,334 in FHLB stock, 
which was in compliance with this requirement.  The Bank has received 
dividends on its FHLB stock, which have averaged 4.86% over the past five 
calendar years and were 6.04% for calendar year 1996.

    For the year ended December 31, 1996, stock and cash dividends paid by 
the FHLB of Dallas to the Bank totaled $89,110 which constitutes a $2,825 
decrease from the amount of dividends received in fiscal year 1995. The 
$22,747 dividend received for the quarter ended December 1996 reflects an 
annualized rate of 5.85% or .63% below the rate for calendar 1995.

    WRITTEN AGREEMENTS WITH OTS.   In 1992, the Bank was deemed to be 
undercapitalized by the OTS and agreed to the issuance in July 1993 of a 
Prompt Corrective Action Directive ("APCAD"), which was amended in August 
1994.  The APCAD required the Bank to submit a capital restoration plan to 
the OTS, prescribed restrictions on dividends, management fees, asset growth, 
branching and other matters and established unreserved capital levels for the 
Bank.  The Bank is currently in compliance with the APCAD.   The following 
table represents the Bank's capital ratios and the APCAD requirements as of 
December 31, 1996.

                                                      Actual    
                                        APCAD      December 31, 
                                      required        1996          Excess
                                      --------     ------------     ------
Core capital.........................   4.0%           4.95%          .95%
Leverage ratio capital...............   4.0            4.95           .95
Risk-based capital...................   8.0           13.47          5.47

However, the OTS has sole discretion as to if and when the APCAD will 
be removed.



                                      30
<PAGE>

    Effective as of June 17, 1996, the Board of Directors of the Bank and the 
OTS signed a Supervisory Agreement which states that it is of mutual benefit 
for the Bank to do the following:

    1.   Complete and submit a revised business and capital plan which will:
         a.   Increase core capital to 6% as of December 31, 1996,
         b.   Increase core capital to 7% as of June 30, 1997.
    2.   Create an asset/liability and investment committee of the Board to
         oversee and review pricing activities, investment selection and
         interest rate risk.
    3.   Report quarterly on the Bank's operating results and explain variances
         of actual results to budgeted projections.

This agreement may be suspended in part or in whole by the OTS Regional 
Director.  In November 1996, the OTS waived the 6% core capital requirement 
contained in the Supervisory Agreement.  However, the June 30, 1997 core 
capital requirement of 7% is still applicable.  The Company estimates that 
between $2 million and $2.5 million of proceeds from a rights offering and 
supplemental offering, discussed below, will be needed to achieve the June 
30, 1997 core capital requirement of 7%.

    Beginning in December 1996, the Company offered to the then existing 
stockholders of the Company subscription rights for the issuance of 732,198 
shares of the Company's common stock.  The subscription price was $5.25 per 
share.  Holders of the subscription rights were able to exercise their 
subscription rights until the expiration date on February 14, 1997.  An 
aggregate of 286,054 shares of the 732,198 shares of common stock were 
subscribed which amounted to $1,501,783.  The proceeds of the offering, while 
meeting the minimum subscription requirement of $1,500,000 outlined in the 
offering, are not sufficient to meet the June 30, 1997 core capital 
requirement.  The Company estimates that an additional $800,000 will be 
needed to meet such requirement.  The remaining 446,144 shares are now being 
offered to other investors at the same subscription price of $5.25 per share. 
The supplemental offering of the remaining shares will expire on March 19, 
1997 unless it is extended by the Company.  Management is currently unable to 
determine how many shares, if any, will be sold to other investors prior to 
the expiration of the supplemental offering.

    REGULATORY ENVIRONMENT FOR 1997.  It is anticipated that in 1997 the 
regulator agendas will continue to focus on three major areas:  regulatory 
compliance, financial management, and cost control.

    The major issues to be reviewed in each of these areas are as follows:

    - REGULATORY COMPLIANCE.  Regulatory compliance should focus on four main
      areas:
      - -  Risk management in all areas of banking with specific attention
           to compliance and fair lending.
      - -  Nondeposit investment products sold only by broker-dealers or
           properly licensed registered representatives and proper
           disclosures or no FDIC insurance of these products.
      - -  Enhancement of individual financial privacy as it relates to new
           home banking, interest banking and smart card usage products.
      - -  Expansion of goals geared to establish know-your-customer policy
           to prevent fraud, protect safety and soundness of the
           institution, and protect name and reputation of the Bank.

    - FINANCIAL MANAGEMENT.  Regulations governing investment securities are
      scheduled for review by the regulatory agencies.  Regulators also may
      finalize proposals for measuring interest rate risk for risk-based
      capital purposes.  The Financial Accounting Standards Board ("FASB")
      is likely to take further action in the area of market valuation, as
      well as in the areas of financial statement disclosures, and
      accounting for derivatives and hedging activities.  Banks' use of
      simple gap models for asset/liability management may be reviewed again
      by regulators.  Falling rates may adversely affect any concentrated
      investment by banks in mortgage-backed securities.



                                      31
<PAGE>

    - COST CONTROL.  Reengineering of retail delivery systems, focus on 
      the customer, customer and product profitability models, and a new
      emphasis on the internal audit function all should get attention
      during 1997.

    In addition, the Federal Reserve and the Office of Comptroller of the 
Currency issued new risk management guidelines, which they began using in 
1996 as part of a new rating system for the banks they examine.  The FDIC 
informally has been following a similar approach of managing bank risk for 
some time now.

    The federal banking agencies' new management guidelines measure a bank's 
control of six different types of risks:

    - Credit risk                 - Operational risk
    - Market risk                 - Legal risk
    - Liquidity risk              - Reputation risk

According to the new guidelines, effective control of each of these must
include:

- Active board and senior management oversight
- Adequate policies, procedures, and limits
- Adequate risk measurement, monitoring, and management information systems
- Comprehensive internal controls

    This new approach for examiners incorporates all-inclusive measurement 
guidelines of the risks associated with managing a bank, and they represent a 
major shift in regulatory risk assessment:  from activities (i.e., commercial 
loans, investing in mortgage-backed securities, etc.) to risk exposures.  
This shift might result in many changes in examination procedures and bank 
evaluation standards.

    It is also anticipated that much legislative time will be devoted to the 
issues of changing the Glass-Stegall Act and Bank Holding Company Act to 
permit common ownership of commercial banks, securities firms and insurance 
companies.


FEDERAL AND STATE TAXATION

    FEDERAL TAXATION.  Thrift institutions are subject to provisions of the 
Internal Revenue Code ("Code") in the same general manner as other 
corporations. However, institutions such as the Bank, which meet certain 
definitional tests and other conditions prescribed by the Code, will receive 
benefits with favorable provisions regarding their deductions from taxable 
income for annual additions to their bad debt reserve.  For purposes of the 
bad debt reserve deductions, loans are separated into "qualifying real 
property loans", which generally are loans secured by certain interests in 
real property, and "non-qualifying loans", which are all other loans.  The 
bad debt reserve deduction with respect to non-qualifying real property loans 
may be based upon actual loss experience or a percentage of taxable income 
before such deduction.

    The Company, which files a consolidated federal income tax return with 
the Bank on a calendar year basis, has elected to use the bad debt deduction 
method which results in the greatest deduction for federal income tax 
purposes.

    Under the percentage of taxable income method, the bad debt reserve 
deduction for qualifying real property loans is computed as 8% of taxable 
income with certain adjustments.  However, due to the decrease in the maximum 
corporate tax rate under the 1986 Act (discussed below), the effective tax 
rate for the Bank was not changed materially.  Under prior law, no deduction 
based on percentage of taxable income is allowed if less than 60% of total 
dollar amount of the assets of the institution falls within certain 
categories.  As of December 31, 1996, the Bank's total assets qualified the 
Bank to take the maximum allowable bad debt deduction. 



                                      32
<PAGE>

Furthermore, the deduction under the percentage of taxable income method is 
available only to the extent that the accumulated bad debt reserve for losses 
on qualifying real property loans does not exceed 6% of such loans at year 
end.  This limitation is not expected to restrict the Bank from making the 
maximum addition to its bad debt reserve.

    The bad debt deduction under the percentage of taxable income method is 
limited to the amount which, when added to the bad debt reserve for losses on 
non-qualifying loans, equals the amount by which 12% of total deposits or 
withdrawable accounts of depositors at year end exceeds the sum of the 
surplus, undivided profits and reserves at the beginning of the year.  It is 
not expected that this limitation will restrict the Bank from making the 
maximum addition to its bad debt reserve.  The deduction under the percentage 
of taxable income method has also historically been reduced by all or a 
portion of the addition to the reserve for losses on non-qualifying loans. 
Under the 1986 Act, the deduction under the percentage of taxable income 
method has been reduced by all of the additions to the reserve for losses on 
non-qualifying loans.

    Under the 1986 Act, for taxable years beginning after December 31, 1986, 
the existing corporate minimum tax was replaced by a corporate alternative 
minimum tax which is imposed to the extent it exceeds the corporation's 
regular income tax for the year (as specially adjusted).  The alternative 
minimum tax is imposed at the rate of 20% of a specially computed tax base.  
Included in this base are a number of preference items, including the 
following:  (i) 100% of the excess of a thrift institution's bad debt 
deduction over the amount that would have been allowable on the basis of 
actual experience; (ii) interest on certain tax-exempt bonds issued after 
August 7, 1986; and (iii) for years beginning 1987, 1988, and 1989, an amount 
equal to one-half of the amount by which a corporation's "book income" (as 
specially defined) exceeds its taxable income with certain adjustments, 
including the addition of preference items (for taxable years commencing 
after 1989, this preference item was replaced with a new item relating to 
"adjusted current earnings" as specially computed).  In addition, for 
purposes of the alternative minimum tax, the amount of alternative minimum 
taxable income that may be offset for net operating losses is limited to 90% 
of the alternative minimum taxable income.

    In addition to the changes discussed above, the 1986 Act, among other 
things, for taxable years beginning after December 31, 1986 (i) required most 
corporations, including thrift institutions, to utilize the accrual method of 
accounting for tax purposes; and (ii) disallows a thrift institution's 
interest expense allocated to certain tax-exempt obligations.  The 1986 Act 
also extends the carryforward period for a thrift's net operating losses 
incurred in taxable years beginning after 1986 and before 1986 from five to 
eight years and permits a three-year carryback and a 15-year carryforward for 
net operating losses incurred in taxable years beginning after 1986.  
Effective January 1, 1993, the Revenue Reconciliation Act of 1993 changes the 
maximum corporate income tax rate to 35%.

    Earnings appropriated to the Bank's bad debt reserve and claimed as a tax 
deduction are not available for payment of cash dividends or for distribution 
to stockholders (including distributions made on dissolution or liquidation), 
without payment of federal income taxes on such dividends or distributions by 
the Bank at the then current tax rates on the amount deemed removed from the 
bad debt reserve.  The amount deemed removed from such reserve and thus 
treated as income to the Bank would include only the amount actually 
distributed, but is also increased (subject to certain limitations) by the 
amount of the tax payable by reason of such distribution.

    The Bank's federal income tax returns have not been examined by the 
Internal Revenue Service since 1990.

    At December 31, 1996 the Company had remaining net operating loss ("NOL") 
carryforwards of approximately $6,487,000 for federal  income tax purposes 
which expire in varying amounts through 2010.  Section 382 of the Code 
provides that these tax NOL carryforwards would be subjected to an annual 
limitation should there be a change of over 50% in the stock ownership of the 
Company during any three year testing period.  Due to the fact that the 
Company has a tax NOL carryforward, it is required to report changes in 
ownership of 5% or greater of stockholders annually to the Internal Revenue 
Service.  The statute and applicable Treasury regulations are extremely 
complex.  The Company believes that no change of ownership as defined in 



                                      33
<PAGE>

applicable Section 382 regulations occurred through the three-year testing 
period ended December 31, 1996. However, the issuance of the stock 
contemplated by the supplemental offering described in REGULATION - WRITTEN 
AGREEMENTS WITH OTS may result in such a change in ownership.  If such a 
change in ownership occurs, the annual use of the tax NOL carryforwards would 
be subject to an annual limitation.

    STATE TAXATION.  As a Delaware holding company, the Company is exempted 
from Delaware corporate income tax but is required to file an annual report 
with and pay an annual fee to the State of Delaware.  The Bank is also 
subject to an annual franchise tax imposed by the State of Delaware.

    The State of New Mexico has a corporate tax which subjects the Bank's New 
Mexico taxable income to tax rates ranging from 4.8% to 7.65%.  New Mexico 
taxable income is computed by applying certain modifications to federal 
taxable income.  The principal difference between state and federal taxable 
income is that interest earned on U.S. government obligations is not taxable 
for state purposes.  

    The Bank's income tax returns have not been audited by state authorities 
during the past five years.

NEW ACCOUNTING STANDARD

    In June 1996, the FASB issued Statement of Financial Accounting Standard 
("SFAS") No. 125, ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS 
AND EXTINGUISHMENTS OF LIABILITIES, which was amended in December 1996.  The 
Statement provides accounting and reporting standards for transfers and 
servicing of financial assets and extinguishment of liabilities.  The Bank is 
required to adopt certain provisions of SFAS No. 125 for the year beginning 
January 1, 1997 and other provisions of the Statement for the year beginning 
January 1, 1998.  The adoption of the new standard, as amended, is not 
expected to have a material impact on the Bank's financial position or 
results of operations.

COMPETITION

    The Bank's primary service area, which presently represents the principal 
operating activities of the Company, includes the New Mexico counties of 
Bernalillo, Cibola, Curry, De Baca, Los Alamos, Roosevelt, Sandoval, Santa 
Fe, Torrance, Valencia, and the Texas counties of Parmer and Bailey  The Bank 
attracts all of its deposits and loans through its branch offices and loan 
production office, primarily from the communities in which those branch 
offices are located; therefore, competition for those deposits is principally 
from other thrift institutions and commercial banks located in the same 
communities as well as brokerage firms and insurance companies. 

EMPLOYEES

    As of December 31, 1996, the Bank had 55 full-time and 13 peak-time 
employees.  The Bank's employees are not represented by any collective 
bargaining group.  Management considers its employee relations to be good.

                                       34

<PAGE>

ITEM 2.       DESCRIPTION OF PROPERTY

    The Company's principal asset is the common stock of the Bank.

    The following table sets forth information relating to each of the Bank's 
current offices.  Net book value and total investment figures are for land, 
building, furniture and fixtures.
                                         Net book value at  Branch deposits at 
         Location          Date acquired December 31, 1996  December 31, 1996  
-------------------------- ------------- -----------------  ------------------ 
MAIN OFFICE:
806 Pile Street                 1966          $921,219         $50,723,898     
Clovis, New Mexico

BRANCH OFFICES:
Prince and Parkland Streets     1978           284,915          13,889,078
Clovis, New Mexico

400 West First Street           1982           682,066          33,551,025
Portales, New Mexico

LOAN PRODUCTION OFFICE:
4061 Ridgerock Road, Suite C    1996            36,205         Not applicable
Rio Rancho, New Mexico

    The book value of the Bank's investment in land, premises and equipment, 
less accumulated depreciation, totaled $1,924,405 at December 31, 1996.  

ITEM 3.       LEGAL PROCEEDINGS

    In the normal course of business, the Bank is involved in litigation 
which, in the Bank's opinion, will not have a material effect on the Bank.  
The following is a discussion of additional litigation involving the Bank.

    On February 1, 1996, an Order of Dismissal was entered by the court with 
respect to a certain derivative lawsuit ("Derivative Lawsuit") which had been 
filed on May 19, 1994 and amended on November 2, 1994.  The Derivative 
Lawsuit was filed by two stockholders, one of whom was a former director of 
the Bank, alleging a number of intentional and negligent acts and omissions 
in the management of the Bank which allegedly resulted in damages and losses 
suffered by the Bank.  The court dismissed, with prejudice, all claims 
against all defendants, except a former president, who was also chief 
executive officer and a director (the "Former President") of the Bank.  A 
dismissal with prejudice means that the charges cannot be refiled.  The court 
also ordered plaintiffs to pay reasonable expenses, including attorney's 
fees, to the Bank's former independent auditors.  A notice of appeal was 
filed by the plaintiff.  The Bank cannot currently predict the outcome of the 
appeal.

    If final judgment in their favor is received in the Derivative Lawsuit, 
certain of the current and former director defendants may make demand on the 
Bank for indemnification of their legal expenses pursuant to OTS regulations. 
The disinterested members of the Bank's Board of Directors must approve said 
indemnification and give 60 days notice to the OTS of the Bank's intention to 
make such indemnification.  No such indemnification shall be made if the OTS 
advises the Bank in writing, within the 60 day notice period, of its 
objection thereof. Currently, no demand for indemnification has been made by 
any of the current defendants.

                                       35

<PAGE>

    With respect to the Former President, the court dismissed the claims in 
the Derivative Lawsuit without prejudice in order to allow the Bank to pursue 
such claims in Federal Court.  In May 1995, the Bank filed a lawsuit against 
the Former President in the United States District Court for the District of 
New Mexico.  In the lawsuit, the Bank asserts that the defendant engaged in 
fraudulent conduct and breached his duties of loyalty and care to the Bank, 
all of which resulted in losses and damages to the Bank.  The Bank is seeking 
recovery of damages from the defendant in excess of $2.8 million, plus 
interest and punitive damages.  The Bank's lawsuit against the Former 
President is scheduled for trial in March 1997.  Legal fees to date with 
respect to the Bank's lawsuit against the Former President have been accrued 
and paid.  The Company does not anticipate that any future legal fees and 
expenses with respect to this lawsuit will materially adversely affect its 
financial condition or results of operations.

ITEM 4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    At a special meeting of the stockholders of the Bank on October 28, 1996, 
an agreement and plan of reorganization by and between the Bank and the 
Company, a newly-formed unitary thrift holding company was approved whereby 
the Bank became a wholly-owned subsidiary of the Company under a 
stock-for-stock exchange.  The number of affirmative and negative votes cast 
for the agreement were 450,041.7 and 24,447, respectively, while the number 
of abstentions was 3,624.

                                       PART II

ITEM 5.    MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

    The Common Stock of the Bank was traded in the over-the-counter market on 
the NASDAQ Small Cap Market under the symbol "FSBC," and the Common Stock of 
the Company is traded in the over-the-counter market on the NASDAQ Small Cap 
Market under the symbol "AABC".  As of March 3, 1997, the Company had 
1,020,652 shares of common stock outstanding and 444 holders of record.  

    The following table sets forth the high and low sales prices of the 
Common Stock of the Company and the Common Stock of the Bank prior to the 
formation of the Company as a unitary thrift holding company as quoted on the 
NASDAQ Small Cap Market.

                                               Price range
                                       --------------------------
                                                         Dividends
                                        High       Low   per share
                                       ------    ------- ---------
1995
    First Quarter                      $  4.44   $  4.00     --
    Second Quarter                     $  5.75   $  4.25     --
    Third Quarter                      $  5.75   $  5.25     --
    Fourth Quarter                     $  7.00   $  5.75     --

1996
    First Quarter                      $  7.25   $  6.00     --
    Second Quarter                     $  7.00   $  5.50     --
    Third Quarter                      $  6.00   $  5.25     --
    Fourth Quarter                     $  6.00   $  5.50     --

                                       36

<PAGE>

    For a foreseeable period of time, the principal source of cash revenues 
to the Company will be dividends paid by the Bank with respect to the Bank's 
common stock.  There are certain statutory and regulatory limitations on the 
payment of such dividends (and other capital distributions) including OTS 
regulatory capital requirements. In some cases, the OTS may prohibit a 
dividend payment that meets these requirements on the basis that such a 
distribution would be an unsafe or unsound practice.  Furthermore, the Bank 
may not pay a dividend if it will cause the institution to become 
"undercapitalized."

    The Bank is subject to an OTS Supervisory Agreement effective as of June 
17, 1996 which requires, among other things, that the Bank increase its 
capital. This agreement will inhibit the payment of dividends by the Bank for 
the foreseeable future.

    The Bank is required to give the OTS thirty days prior notice of the 
proposed declaration by its directors of any dividend.  Any such dividend 
declared within the thirty day period or without giving such notice shall be 
invalid and shall confer no rights or benefits on the Company as the sole 
stockholder of the Bank.

    Under the Federal Deposit Insurance Act, an insured bank is prohibited 
from paying dividends on its capital stock while in default in the payment of 
any assessment due to the FDIC except in those cases where the amount of the 
assessment is in dispute and the insured bank has deposited satisfactory 
security.  The Bank is not in default in the payment of any such assessment.

    The Bank last paid a stock dividend in 1989 and a cash dividend in 1988. 
The Company's Board of Directors does not currently intend to declare any 
cash dividends at any time in the foreseeable future.

    At a special meeting of the stockholders of the Bank on October 18, 1996, 
an agreement and plan of reorganization by and between the Bank and the 
Company was approved whereby the Bank became a wholly-owned subsidiary of the 
Company under a stock for stock exchange with the existing stockholders of 
the Bank. The 732,198 outstanding shares of Bank Common Stock were exchanged 
for an equal number of shares of Company Common Stock effective on October 21,
1996.  The shares of Company Common Stock  were not registered under the 
Securities Act of 1933 in reliance on the Section 3(a)(12) exemption 
thereunder relating to the formation of a thrift holding company under 
specified conditions.

ITEM 6.       MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

SELECTED CONSOLIDATED FINANCIAL HIGHLIGHTS

    The Company became the unitary thrift holding company for the Bank as a 
result of the consummation of an Agreement and Plan of Reorganization and 
related Plan of Merger on October 21, 1996 (the "Merger"). The Company did 
not have any material assets prior to the Merger.  Following the Merger, the 
Company's consolidated statement of financial condition and statement of 
operations are not materially different from the Bank's statement of 
financial condition and statement of operations.  The Company is the 
successor registrant to the Bank under the Securities Act of 1933.  The 
following table sets forth selected consolidated historical financial and 
operating data for the Company as of an for the each of the five fiscal years 
ended December 31, 1996 and has been derived from and should be read in 
conjunction with the audited consolidated financial statements of the 
Company.  The following summary financial information is qualified in its 
entirety by and should be read in conjunction with the detailed information 
and financial statements of the Company, including the notes thereto, which 
information as of December 31, 1996 and 1995 and for each of the three years 
in the period ended December 31, 1996, are included in this Form 10-KSB.

                                      37
<PAGE>
<TABLE>
                                              For the years ended December 31            
SELECTED CONSOLIDATED OPERATING    ----------------------------------------------------- 
 DATA:                               1996        1995        1994      1993       1992
                                   --------    --------   --------   --------   --------
                                        (Dollars In Thousands Except Per Share Data)
<S>                                <C>         <C>        <C>        <C>        <C>     
Income statement data:
    Interest income                $  7,473    $  8,417   $  7,888   $  8,538   $ 10,608
    Interest expense                  4,717       5,423      4,563      4,943      6,821
                                   --------    --------   --------   --------   --------
    Net interest income before                   
     provision for loan losses        2,756       2,994      3,325      3,595      3,787
    Provision for loan losses            14         (15)         4         21        386
                                   --------    --------   --------   --------   --------
Net interest income after provision              
 for loan losses                      2,742       3,009      3,321      3,574      3,401
    Net gain (loss) on mortgage                  
     loans held-for-sale                141         118        (19)       331        254
    Net gain (loss) on sale of                   
     securities                          --          --          5        258       (124)
    Real estate operations, net         (43)        (58)      (273)      (616)    (1,196)
    Other income, net                   664         716        752        744        950
    Other expenses                   (4,238)     (3,371)    (3,635)    (3,677)    (3,417)
                                   --------    --------   --------   --------   --------
Income (loss) before income taxes      (734)        414        151        614       (132)
    Income tax expense (benefit)         --          --       (189)        --         --
                                   --------    --------   --------   --------   --------
Net income (loss)                  $   (734)   $    414   $    340   $    614   $   (132)
                                   --------    --------   --------   --------   --------
                                   --------    --------   --------   --------   --------
Per share data:
    Weighed average common 
     shares outstanding             710,404     695,698    695,698    695,698    695,698
    Net income (loss) per 
     common share                  $  (1.03)   $   0.59   $   0.49   $   0.88   $  (0.19)
                                   --------    --------   --------   --------   --------
                                   --------    --------   --------   --------   --------

                                                        December 31
SELECTED CONSOLIDATED FINANCIAL    ------------------------------------------------------
 CONDITIONS DATA:                    1996        1995        1994       1993       1992
                                   --------    --------   --------    --------   --------
                                                   (Dollars In Thousands)

Loans receivable, net              $ 45,596    $ 34,332   $ 35,670   $ 36,980   $ 45,027
Loans held-for-sale                     564         862        671      4,861      4,136
Mortgage-backed securities, net          --          --         --         --     57,511
Investment securities                    --          --         --         --      9,384
Securities held-to-maturity          29,113      36,404     77,505     65,909         --
Securities available-for-sale        23,640      33,090      2,980     10,722         --
Real estate owned, net                   86         114        421      2,967      5,669
Total assets                        106,853     116,966    125,709    136,338    139,109
Deposits                             98,164     110,633    112,773    130,690    133,639
Borrowings                            3,000          --      7,400        --          --
Net unrealized depreciation on                                      
 available-for-sale securities,                                     
 net                                   (199)       (204)      (363)       (28)        --
Stockholders' equity                  5,086       5,620      5,048      5,043      4,458
</TABLE>
                                   (Continued)
                                  
                                       38
<PAGE>
<TABLE>
SELECTED FINANCIAL RATIOS AND 
 OTHER DATA:                               1996      1995      1994     1993     1992
                                         -------    ------    ------   ------   ------
<S>                                      <C>        <C>       <C>      <C>      <C>   
PERFORMANCE RATIOS:                      
    Return on assets (ratio of net       
     income/(loss) to average total       
     assets)                              (0.66)%    0.34%     0.26%    0.45%   (0.09)%
    Interest rate spread information:    
       Average during period               2.43      2.45      2.62     2.89     3.07
       End of period                       2.68      2.13      2.42     2.88     3.56
    Net interest margin (1)                2.54      2.54      2.64     2.83     2.88
    Ratio of operating expense to                             
     average total assets                  3.83      2.83      2.98     3.12     3.25
    Return on equity (ratio of net                            
     income/(loss) to average equity)    (13.70)     7.75      6.73    12.93    (2.92)
                                         
QUALITY RATIOS:                          
    Non-performing assets to total       
     assets at end of year                 1.60%     1.44%     2.98%    4.54%    6.93%
    Allowance for loan losses to 
     non-performing loans                 25.07     25.36     12.29     8.22     5.55
    Allowance for loan losses to         
     total loans                           0.94      1.25      1.29     1.38     1.19
                                         
CAPITAL RATIOS:                          
    Equity to total assets at the        
     end of year                           4.76%     4.81%     4.02%    3.70%    3.20%
    Average equity to average assets       4.78      4.40      3.85     3.45     3.18
    Ratio of average interest-earning    
     assets to average interest-bearing  
     liabilities                         102.55    101.99    100.66    98.29    95.96
</TABLE>

(1) Net interest income divided by average interest earning assets

GENERAL

    The Company is a Delaware corporation which was organized in 1996 for the 
purpose of becoming the thrift holding company of the Bank.  The Bank is a 
federally chartered stock savings bank conducting business from three banking 
locations in Clovis and Portales, New Mexico and a loan production office in 
Rio Rancho, New Mexico.  The Bank has a wholly-owned subsidiary, FEDCO, which 
is currently inactive.

    The Bank is principally engaged in the business of attracting retail 
deposits from the general public and investing those funds in first mortgage 
loans in owner occupied, single-family residential loans and mortgage-backed 
securities.  To a lesser extent, the Bank originates residential construction 
loans and commercial real estate loans. The Bank also originates consumer 
loans, including loans for the purchase of automobiles and home improvement 
loans, and commercial loans including SBA loans.

    The most significant outside factors influencing the operations of the 
Bank and other financial institutions include general economic conditions, 
competition in the local market place and the related monetary and fiscal 
policies of agencies that regulate financial institutions.  More 
specifically, the cost of funds, primarily consisting of deposits, is 
influenced by interest rates on competing investments and general market 
rates of interest.  Lending activities are influenced by the demand for real 
estate financing and other types of loans, which in turn is affected by the 
interest rates at which such loans may be offered and other factors affecting 
loan demand and funds availability.

                                      39
<PAGE>

    Beginning in 1994, the nation's economy experienced an increasing 
interest rate environment.  After several years of declining interest rates, 
rates increased drastically during 1994 and the first part of 1995.  The Bank 
experienced a stable interest rate environment in 1996 while adjustable rate 
assets repriced on a delayed basis.  The net interest yield, or net interest 
income as a percentage of average earning assets, has increased during 1996. 
A higher volume of permanent single family lending activity has occurred as 
a result of the stabilized interest rate environment.  The Bank has also been 
able to generate new sources of commercial and single family construction 
lending, consumer lending and commercial real estate lending to compliment 
the volume of permanent single family lending.  The Bank reduced its Real 
Estate Owned levels by approximately $2.5 million during 1994 and an 
additional $307,000 in 1995, allowing the institution to increase its earning 
assets.

REGULATORY MATTERS

    In 1992, the Bank was deemed to be undercapitalized by the OTS and agreed 
to the issuance in July 1993 of a APCAD, which was amended in August 1994.  
The APCAD required the Bank to submit a capital restoration plan to the OTS, 
prescribed restrictions on dividends, management fees, asset growth, 
branching and other matters and established unreserved capital levels for the 
Bank.  The Bank is currently in compliance with the APCAD.  The following 
table represents the Bank's capital ratios and the APCAD requirements as of 
December 31, 1996.

                                                     Actual   
                                        APCAD     December 31,
                                       required       1996        Excess
                                       --------   ------------    ------
Core capital . . . . . . . . . . . .     4.0%         4.95%         .95%
Leverage ratio capital . . . . . . .     4.0          4.95          .95
Risk-based capital . . . . . . . . .     8.0         13.47         5.47

However, the OTS has sole discretion as to if and when the APCAD will be 
removed.

    Effective as of June 17, 1996, the Board of Directors of the Bank and the 
OTS signed a Supervisory Agreement which states that it is of mutual benefit 
for the Bank to do the following:

    1.   Complete and submit a revised business and capital plan which will:
         a.   Increase core capital to 6% as of December 31, 1996,
         b.   Increase core capital to 7% as of June 30, 1997.
    2.   Create an asset/liability and investment committee of the Board to
         oversee and review pricing activities, investment selection and
         interest rate risk.
    3.   Report quarterly on the Bank's operating results and explain variances
         of actual results to budgeted projections.

This agreement may be suspended in part or in whole by the OTS Regional 
Director.  In November 1996, the OTS waived the 6% core capital requirement 
contained in the Supervisory Agreement.  However, the June 30, 1997 core 
capital requirement of 7% is still applicable.  The Company estimates that 
between $2 million and $2.5 million of proceeds from a rights offering and 
supplemental offering, discussed below, will be needed to achieve the June 
30, 1997 core capital requirement of 7%.

    Management's intent is to raise additional capital through the net 
proceeds of a subscription offering it undertook between December 26, 1996 
and February 14, 1997 and a supplemental subscription offering it is 
currently undertaking. Beginning in December 1996, the Company offered to the 
then existing stockholders of the Company subscription rights for the 
issuance of 732,198 shares of the Company's common stock.  The subscription 
price was $5.25 per share.  Holders of the subscription rights were able to 
exercise their subscription rights until the expiration date on February 14, 
1997.  An aggregate of 286,054 shares of the 732,198 shares of common stock 
were subscribed which amounted to $1,501,783.  The proceeds of the offering, 
while meeting the 

                                     40
<PAGE>

minimum subscription requirement of $1,500,000 outlined in the offering, are 
not sufficient to meet the June 30, 1997 core capital requirement. The 
Company estimates that an additional $800,000 will be needed to meet such 
requirement.  The remaining 446,144 shares are now being offered to other 
investors at the same subscription price of $5.25 per share.  The 
supplemental offering of the remaining shares will expire on March 19, 1997 
unless it is extended by the Company.  Management is currently unable to 
determine how many shares, if any, will be sold to other investors prior to 
the expiration of the supplemental offering.

RESULTS OF OPERATIONS

    Operating results are impacted by many factors, the most important factor 
being the interest spread between the yield on loans and investments and the 
cost of funds.  The following table presents for the periods indicated the 
total dollar amount of interest income from average interest-earning assets 
and the resultant yields, as well as the interest expense on average 
interest-bearing liabilities, expressed both in dollars and rates.  No tax 
equivalent adjustments were made and all average balances are monthly average 
balances.  Non-accruing loans have been included in the table as loans 
carrying a zero yield.

<TABLE>
                                                                  Year ended December 31,
                                                                  (Dollars in Thousands)
                                 ----------------------------------------------------------------------------------------
                                              1996                          1995                          1994
                                 ----------------------------------------------------------------------------------------
                                  Average   Interest            Average   Interest             Average   Interest
                                outstanding  earned/  Yield/  outstanding  earned/   Yield/  outstanding  earned/  Yield/
                                  balance     paid     rate     balance     paid      rate     balance     paid     rate 
                                 ----------------------------------------------------------------------------------------
<S>                              <C>       <C>        <C>      <C>       <C>         <C>     <C>        <C>        <C>   
Interest-earning assets:     
    Loans receivable (1)         $ 40,095  $ 3,477     8.67%   $ 36,856  $ 3,643      9.88%  $ 39,271   $  3,176    8.09%
    Mortgage-backed securities     59,161    3,434     5.80      69,759    4,060      5.82     77,288      4,219    5.46
Investment securities               5,028      293     5.83       8,185      516      6.30      6,208        359    5.78
Other interest-earning assets       4,193      269     6.42       3,119      198      6.35      3,059        134    4.38
                                 --------  -------    ------   --------  -------     ------  --------   --------    -----
       Total interest-earning                                 
        assets (1)               $108,477  $ 7,473     6.89%   $117,919  $ 8,417      7.14%  $125,826   $  7,888    6.27%
                                 --------  -------    ------   --------  -------     ------  --------   --------    ------
                                 --------  -------    ------   --------  -------     ------  --------   --------    ------
Interest-bearing liabilities:                                 
    Savings deposits             $105,319  $ 4,692     4.46%   $114,315  $ 5,343      4.67%  $119,967   $  4,315    3.60%
    Federal Home Loan Bank                                    
     advances                         459       25     5.47       1,305       80      6.13      5,038        248    4.92
                                 --------  -------    ------   --------  -------     ------  --------   --------    ------
       Total interest-bearing                                 
        liabilities              $105,778  $ 4,717     4.46%   $115,620  $ 5,423      4.69%  $125,005   $  4,563    3.65%
                                 --------  -------    ------   --------  -------     ------  --------   --------    -----
                                 --------  -------    ------   --------  -------     ------  --------   --------    -----
Net interest income                        $ 2,756                       $ 2,994                        $  3,325
                                           -------                       -------                        --------
                                           -------                       -------                        --------
Net interest rate spread                               2.43%                          2.45%                         2.62%
                                                       -----                          -----                         -----
                                                       -----                          -----                         -----
Net interest-earning assets      $  2,699                      $  2,299                      $   821
                                 --------                      --------                      -------
                                 --------                      --------                      -------
Net yield on average 
 interest-earning assets                               2.54%                          2.54%                         2.64%
                                                       -----                          -----                         -----
                                                       -----                          -----                         -----
Average interest-earning 
 assets to average interest-
 bearing liabilities                        102.55%                       101.99%                         100.66%  
                                            ------                        ------                          ------
                                            ------                        ------                          ------
</TABLE>

(1) Calculated net of loans in process 

                                        41
<PAGE>

    The following table presents the weighted average yields earned on loans, 
investments, and other interest-earning assets, and the weighted average 
rates paid on deposits and borrowings and the resultant interest rate spreads 
at the dates indicated.  Weighted average rates are based on the balances at 
the end of the period.
                                                  At December 31,
                                             ------------------------
                                             1996      1995      1994
                                             ----      ----      ----
WEIGHTED AVERAGE YIELD ON:
    Loans receivable                         8.59%     8.90%     8.65%
    Mortgage-backed securities               5.84      5.90      5.70
    Investment securities and other 
      interest-earning assets                6.24      6.15      6.09
                                             ----      ----      ----
COMBINED WEIGHTED AVERAGE YIELD ON 
  INTEREST-EARNING ASSETS                    7.11      6.90      6.62
                                             ----      ----      ----
WEIGHTED AVERAGE RATE PAID ON:
    Savings deposits                         2.50      2.75      3.20
    Transaction accounts                     2.39      3.09      3.48
    CDs                                      5.02      5.39      4.40
    Borrowings                               5.50        --      5.59
                                             ----      ----      ----
COMBINED WEIGHTED AVERAGE RATE PAID 
  ON INTEREST-BEARING LIABILITIES            4.34      4.77      4.20
                                             ----      ----      ----

SPREAD                                       2.77%     2.13%     2.42%
                                             ----      ----      ----
                                             ----      ----      ----

    The following table presents the dollar amount of changes in interest 
income and interest expense for major components of interest-earning assets 
and interest-bearing liabilities and distinguishes between the increase 
related to higher or lower outstanding balances and the volatility of 
interest rates.  For each category of interest-earning assets and 
interest-bearing liabilities, information is provided on changes attributable 
to (i) changes in volume (i.e., changes in volume multiplied by old rate) and 
(ii) changes in rate (i.e., changes in rate multiplied by old volume).  For 
purposes of this table, changes attributable to both rate and volume, which 
cannot be segregated, have been presented separately.
<TABLE>
                                                                  Year ended December 31
                                       -----------------------------------------------------------------------------
                                                    1996 vs 1995                           1995 vs 1994
                                       ------------------------------------    -------------------------------------
                                             Increase (decrease) due to              Increase (decrease) due to
                                       ------------------------------------    -------------------------------------
                                                            Rate/                                   Rate/
                                       Volume     Rate     volume     Total    Volume     Rate     volume     Total
                                       ------    -----     ------     -----    ------    ------    ------     ------
                                                                       (In Thousands)
<S>                                     <C>      <C>        <C>       <C>      <C>       <C>        <C>       <C>
Interest-earning assets:  
    Loan portfolio                      $ 320    $(447)     $(39)     $(166)   $(195)    $  705     $ (43)    $  467
    Investments                          (199)     (39)       15       (223)     114         33        10        157
    Mortgage-backed securities           (617)     (11)        2       (626)    (411)       278       (26)      (159)
    Other interest earning assets          68        2         1         71        3         60         1         64
                                        -----    -----      ----      -----    -----     ------     -----     ------
Total interest-earning assets           $(428)   $(495)     $(21)     $(944)   $(489)    $1,076     $ (58)    $  529
                                        -----    -----      ----      -----    -----     ------     -----     ------
                                        -----    -----      ----      -----    -----     ------     -----     ------
Interest-bearing liabilities:     
    Savings deposits                    $(420)   $(250)     $ 19      $(651)   $(203)    $1,288     $ (57)    $1,028
    Federal Home Loan Bank advances       (52)     (10)        7        (55)    (184)        61       (45)      (168)
                                        -----    -----      ----      -----    -----     ------     -----     ------
Total interest-bearing liabilities      $(472)   $(260)     $ 26      $(706)   $(387)    $1,349     $(102)    $  860
                                        -----    -----      ----      -----    -----     ------     -----     ------
                                        -----    -----      ----      -----    -----     ------     -----     ------
Change in net interest income           $  44    $(235)     $(47)     $(238)   $(102)    $ (273)    $  44     $ (331)
                                        -----    -----      ----      -----    -----     ------     -----     ------
                                        -----    -----      ----      -----    -----     ------     -----     ------
</TABLE>



                                      42
<PAGE>


COMPARISON OF YEARS ENDED DECEMBER 31, 1996 AND 1995. 

    Net loss for the year ended December 31, 1996 was $734,000 (primarily due 
to a one time FDIC insurance charge of $762,000, see NONINTEREST EXPENSE) or 
$1.03 per share, compared to net income of $414,000 or $.59 per share for 
1995. The 1996 loss as compared to earnings in 1995 resulted from a decrease 
in net interest income after provision for loan losses of $267,000 and an 
increase in noninterest expense of $852,000.

    NET INTEREST INCOME.  Net interest income before provision for loan 
losses is the difference between interest earned on interest-earning assets 
and interest paid on interest-bearing liabilities.  Net interest income 
before provision for loan losses decreased $238,000 to $2,756,000 for 1996 
compared to $2,994,000 in 1995. The decrease primarily is the result of the 
early recognition in interest income of $365,000 in 1995 and the foregone 
interest thereon in 1996 resulting from the 1995 pay-off of a previously 
renegotiated loan.  These decreases were offset by a 8.5% decrease in average 
interest-bearing liabilities.

    PROVISION FOR LOAN LOSSES.  Management determines the amount of the 
allowance for loan loss which covers specific loans as well as estimated 
losses inherent in the loan portfolio.  The level of the allowance is based 
on such factors as the amount of non-performing assets, historical loss 
experience, regulatory policies, general economic conditions, the estimated 
fair value of the underlying collateral and other factors which may affect 
the collectibility of the loans.  During 1996, the provision for loan losses 
changed to $14,000 from a negative $15,000 for 1995.  The 1996 net provision 
included an aggregate negative provision of $65,000 recorded in early 1996 
resulting from management's determination that the previously recorded 
allowance for loan losses was excessive at that time given the level of 
inherent risk in the loan portfolio at that time.  As the level of lending 
increased in 1996, an additional provision of $79,000 was provided.  The 
increased levels of lending encompassed increases in commercial real estate 
lending, permanent single family residential, consumer and construction 
lending.  As underlying loan portfolios increased, management provided 
increased levels of loan loss allowances to compensate for the aggregate 
increase in credit risk.

    NONINTEREST INCOME.  Noninterest income was $806,000 in 1996 compared to 
$833,000 in 1995.  The decrease of 3.2% was caused primarily by reduced 
levels of loans sold into the secondary market in 1996 which caused decreases 
in loan servicing fees.  The decreased levels of servicing fees were 
partially offset by an increase in gains on loans held-for-sale as a result 
of management's efforts to more selectively sell loans into the secondary 
market and achieve higher returns.

    NONINTEREST EXPENSE.  Noninterest expense increased $852,000 or 24.8% to 
$4,281,000 in 1996 compared to $3,429,000 in 1995.  Salaries and employee 
benefits increased $89,000 primarily as a result of the opening of a loan 
production office in Rio Rancho, New Mexico during the third quarter of 1996. 
Deposit insurance premiums increased $741,000 due primarily to a one-time 
charge for the SAIF assessment of $762,000 accrued for the quarter ending 
September 30, 1996, which was paid in November 1996.  Other expenses 
increased $40,000.  The aforementioned increases were partially offset by a 
$15,000 decrease in real estate operations, net, which is reflective of 
continuing lower levels of foreclosed real estate.

COMPARISON OF YEARS ENDED DECEMBER 31, 1995 AND 1994

    Net income for the year ended December 31, 1995 was $414,000 or $.59 per 
share, compared to $340,000 or $.49 per share for 1994.  The increase in net 
income resulted from an increase in noninterest income of $95,000 and a 
decrease in noninterest expenses of $479,000 which were offset by a decrease 
in net interest income after provision for loan losses of $312,000, despite 
the early recognition in interest income of $365,000 resulting from the 
pay-off of a renegotiated loan.  In addition, there was a reduced level of 
income tax benefits of $189,000 in 1994 to none in 1995.

    NET INTEREST INCOME.  Net interest income before provision for loan 
losses decreased  $331,000 to $2,994,000 for 1995 compared to $3,325,000 in 
1994.  The decrease primarily reflects the 28.49% increase in the cost of 
average interest-bearing liabilities to 4.69% in 1995 compared to 3.65% for 
1994.  The decline was offset 


                                      43

<PAGE>

somewhat by the recording of $365,000 in interest income in 1995 which 
stemmed from the pay-off, prior to maturity, of a renegotiated loan.

    PROVISION FOR LOAN LOSSES.  Management determines the amount of the 
allowance for loan loss which covers specific loans as well as estimated 
losses inherent in the loan portfolio.  The level of the allowance is based 
on such factors as the amount of non-performing assets, historical loss 
experience, regulatory policies, general economic conditions, the estimated 
fair value of the underlying collateral and other factors which may affect 
the collectibility of the loans.  During 1995, the provision for loan losses 
was a negative $15,000 which was a reduction of $19,000 from the provision of 
$4,000 recorded in 1994. The reduction in 1995 was primarily reflective of 
management's estimate of a lower level of allowance for loan losses necessary 
as a result of an overall decline in non-performing assets of $3,751,000 at 
December 31, 1994 to $1,687,000 at December 31, 1995. In addition, the net 
loan portfolio at December 31, 1995 was $34,332,000 which represented a 
decline of $1,338,000, or 3.75% from the December 31, 1994 balance of 
$35,670,000.

    NONINTEREST INCOME.  Noninterest income was $833,000 in 1995 compared to 
$738,000 in 1994.  The increase  of 12.8% was caused primarily by improvement 
in the results of loans sold during 1995, net gains of $118,000 as compared 
to net losses of $19,000 in 1994.  The overall improvement was the result of 
more favorable pricing obtained from the secondary market on loans sold in 
1995 which was attributable to more stable interest rates from that 
experienced in 1994. The increase in other income was also the result of an 
increase in loan servicing and other fees of $20,000 which was offset by a 
decline in other income of $55,000.

    NONINTEREST EXPENSE.  Noninterest expense decreased $479,000 or 12.26% to 
$3,429,000 in 1995 compared to $3,908,000 in 1994.  Salaries and employee 
benefits decreased $110,000 primarily as the result of a lower average number 
of employees maintained throughout 1995.  Deposit insurance premiums 
decreased $45,000 resulting from a reduction of premiums charged by the FDIC 
due to lower levels of insured deposits. Real estate operations, net 
decreased $215,000 primarily reflecting a decrease in real estate expenses 
which was the result of continuing lower levels of foreclosed real estate.  
Professional fees increased $58,000 due to activities specifically related to 
the regulatory agreement under which the Bank operates as well as activities 
related to the certain litigation in which the Bank has been involved with 
since 1992.  Other expenses also declined $136,000 primarily as the result of 
reductions in office supplies and miscellaneous operating expense.

    PROVISION FOR INCOME TAXES.  There was no net provision for income taxes 
in 1995 as compared to the recognition of an income tax benefit of $189,000 
in 1994.  The 1994 benefit stemmed from management's estimate of near-term 
future benefits to the Bank from its net operating loss carryforwards.  Those 
estimates remained unchanged as of the end of 1995 and therefore the 
underlying net deferred tax asset remained unchanged.

ASSET/LIABILITY MANAGEMENT AND INTEREST RATE SENSITIVITY

    The Bank attempts to maximize net interest income by achieving a positive 
interest rate spread that can be sustained during fluctuations in prevailing 
interest rates.   Management monitors the mix of earning assets on a 
continuous basis in order to react to fluctuating interest rate environments. 

    Risk-based capital guidelines and the corresponding asset risk weighting 
have resulted in an incentive to invest in mortgage-backed and U.S. Agency 
Securities, particularly those issued by government sponsored entities such 
as FNMA, GNMA, and FHLMC.  In addition, the favorable risk weighting assigned 
to residential loans provided the incentive to invest in these assets.  This 
asset mix has always been the basis on which the Bank has focused. 


                                      44

<PAGE>

    The Bank assumes a high level of interest rate risk as a result of its 
policy to originate fixed-rate single family home loans.  These risks are 
minimized by selling mostly thirty year mortgage loans into the secondary 
market.  These loans generally have longer terms than the short term 
characteristics and liabilities of customer accounts and borrowed money.  
During much of 1993 and early 1994, falling interest rates resulted in record 
prepayment of high yielding loans in mortgage-backed securities and the Bank 
was unable to reinvest the proceeds in investment instruments with similar 
yields.  The result has been a contraction of interest rates spreads placing 
pressure on the Bank's net interest income.  In order to reach the Bank's 
desired 4.0% core capital level, management began the reduction of the asset 
size of the Bank by reducing deposits and FHLB borrowings through cash flows. 
The Bank was able to payoff FHLB borrowings through cash flows in 1995 and 
1996.

    Interest rate sensitivity is the rate at which the Bank's assets and 
liabilities are subject to repricing at future time periods.  Management 
seeks to effectively manage interest rate sensitivity to insure that net 
interest income is maximized while the impact of change on market interest 
rates is minimized.  It is the objective of the Bank to reduce the 
sensitivity of its earnings to fluctuating interest rates by diversifying the 
sources of funds, improving its interest rate spread, and improving the 
ratio of earning assets to interest bearing liabilities.  Also, the Bank 
needs to maintain a match of maturities and interest rate sensitivity of its 
assets and liabilities.

    The differences between the volume of assets and liabilities  in the 
Bank's current portfolio, which are  subject to repricing in future time 
periods, are known as interest rate sensitivity gaps.  Certain estimates and 
assumptions are included in the data in the table below which sets forth the 
interest rate sensitivity analysis at December 31, 1996.

    The following table sets forth the assumed repricing and maturity periods 
of the Bank's interest-earning assets and interest-bearing liabilities at 
December 31, 1996 and the interest rate sensitivity gap percentages at the 
dates indicated.  The interest rate sensitivity gap is defined as the amount 
by which assets repricing within the respective periods exceed liabilities 
repricing within such periods.  The effect of these assumptions is to 
quantify the dollar amount of items that are interest-rate sensitive and can 
be repriced within each of the periods specified. Such repricing can occur in 
one of three ways: (1) the rate of interest to be paid on an asset or 
liability may adjust periodically on the basis of an index; (2) an asset or 
liability such as a mortgage loan may amortize, permitting reinvestment of 
cash flows at the then-prevailing interest rates; or (3) an asset or 
liability may mature, at which time the proceeds can be reinvested at current 
market rates.

<TABLE>
                                                                Maturing or repricing amount
                                     --------------------------------------------------------------------------------
                                     Within one  Over 1 to 3  Over 3 to 5  Over 5 to  Over 10 to  Over 20
                                         year       years        years      10 years   20 years    years       Total
                                     ----------  -----------  -----------  ---------  ----------  -------    --------
                                                                    (Dollars In Thousands)
<S>                                   <C>           <C>          <C>          <C>       <C>          <C>        <C>
Total Rate Sensitive Assets: 
  Mortgages:
    Adjustable-rate (1)                $12,224     $    --      $   --      $   --      $   --     $   --    $ 12,224
    Fixed-rate (2)                       1,174       3,281       2,699       4,041       2,300        191      13,686
    Construction(6)                        898          --          --          --          --         --         898
    Non-residential adjustable (2)       3,792       1,690          --          --          --         --       5,482
    Non-residential fixed                1,436         695         621         206       2,389         --       5,347
  Non-Mortgages:  
    Consumer and Commercial (2)(6)       3,111       5,412         704          --          --         --       9,227
  Investments:    
    Investment securities (3)              285          96          --          --          --      1,572       1,953
    Mortgage-backed (1)(2)              33,446      13,594       5,912          --          --         --      52,952
    Funds sold (3)                       1,138          --          --          --          --         --       1,138
                                       -------     -------      ------      ------      ------     ------    --------
TOTAL                                  $57,504     $24,768      $9,936      $4,247      $4,689     $1,763    $102,907
                                       -------     -------      ------      ------      ------     ------    --------
                                       -------     -------      ------      ------      ------     ------    --------
                                                                                       (Table continues on next page)
</TABLE>

                                                            45
<PAGE>

<TABLE>
                                                               Maturing or repricing amount
                                  ----------------------------------------------------------------------------------------- 
                                  Within one    Over 1 to 3   Over 3 to 5   Over 5 to    Over 10 to   Over 20 
                                     year           years          years     10 years     20 years      years       Total   
                                  ----------    -----------   -----------   ---------    ----------   -------     --------- 
                                                                  (Dollars In Thousands)
<S>                               <C>            <C>           <C>           <C>          <C>          <C>         <C>
Total Rate Sensitive Liabilities: 
  Deposits: 
    Certificates of deposit (3)   $  51,484       $  8,148     $  1,473     $     --     $     --    $     --     $  61,105 
    IRAs                              7,336          1,509          966           --           --          --         9,811 
    Money market (4)                  5,255          5,256           --           --           --          --        10,511 
    NOW accounts (4)                    166          3,974        1,380        1,380           --          --         6,900 
    Savings accounts (4)                200          4,793        1,664        1,664           --          --         8,321 
    Advances                          3,000             --           --           --           --          --         3,000 
                                  ---------       --------     --------     --------     --------    --------     --------- 
  TOTAL                           $  67,441       $ 23,680     $  5,483     $  3,044     $     --    $     --     $  99,648 
                                  ---------       --------     --------     --------     --------    --------     --------- 
                                  ---------       --------     --------     --------     --------    --------     --------- 

December 31, 1996  
Cumulative GAP (5)                $  (9,937)      $ (8,849)    $ (4,396)    $ (3,193)    $ 1,496     $  3,259
GAP (5) as a percent of assets        (9.30)%        (8.28)%      (4.11)%      (2.99)%      1.40 %       3.05 %

December 31, 1995  
GAP (5) as a percent of assets         4.71 %         6.27 %       1.73 %       0.99 %      1.23 %       1.30 %

December 31, 1994  
GAP (5) as a percent of assets        (3.96)%        (7.12)%      (4.54)%      (1.83)%     (1.31)%      (1.31)%
</TABLE>

(1)  MOST ADJUSTABLE RATE ASSETS ARE INCLUDED IN THE UNDER 1 YEAR CATEGORY, AS
     THEY ARE SUBJECT TO AN INTEREST RATE ADJUSTMENT EVERY SIX OR TWELVE MONTHS,
     DEPENDING UPON LOAN PLAN.
(2)  MATURITY/RATE SENSITIVITY IS BASED UPON CONTRACTUAL MATURITY WITH PROJECTED
     REPAYMENT OF PRINCIPAL.
(3)  BASED ON CONTRACTUAL MATURITY OF THE INVESTMENTS.
(4)  SAVINGS ACCOUNT DECAY RATES USED ASSUME THAT THE ACCOUNTS HAVE A MARKET
     VALUE SENSITIVITY APPROXIMATING THAT OF A 2 1/2 YEAR TREASURY BOND.
(5)  THE DIFFERENCE BETWEEN RATE SENSITIVE ASSETS AND RATE SENSITIVE
     LIABILITIES.
(6)  GENERALLY FIXED RATE.

    During 1995 and 1994 the Bank sold fixed-rate whole loans "held-for-sale"
while retaining adjustable-rate mortgages.  During 1996, the Bank began to
retain certain fixed-rate loans rather than placing them in the secondary
markets.  In 1994, the Bank increased its investment portfolio with the purchase
of FNMA and FHLMC participation certificates with three to five year durations
and U.S. government agency securities which step-up annually.  These purchases
were primarily from cash flow during 1994, however cash flow was used since the
third quarter of 1994 through the first quarter of 1995 to reduce FHLB advances.
Throughout the remainder of 1995, cash flow from operations and investment
activities have been placed in lower interest earning, but highly liquid, cash
and cash equivalents.  Beginning in the third quarter of 1996, FHLB advances
were used to supplement cash flow from operations as the Bank's lending
activities began to increase.

    Presented below, as of December 31, 1996, is an analysis of the Bank's
interest rate risk provided by OTS as measured by changes in NPV for
instantaneous and sustained parallel shifts in the yield curve, in 100 basis
point increments, up and down 400 basis points.  As illustrated in the table,
the Bank's NPV is as sensitive to rising rates as declining rates.  This occurs
principally because, as rates rise, the market value of fixed-rate loans
declines due to both the rate increase and slowing prepayments (and the NPV
focuses on the Bank's entire portfolio, not just assets that are subject to
adjustment or maturity within one year).  When rates decline, the Bank does not
experience a significant rise in market value for these loans because borrowers
repay at relatively high rates.


                                      46

<PAGE>

                          Change in         At December 31, 1996
                        interest rate    ------------------------
                        (basis points)   $  Change       % Change
                        -------------    ----------      -------- 
                                           (000's)

                             +400        $  (3,639)         (50)%
                             +300           (2,420)         (33)
                             +200           (1,364)         (19)
                             +100             (561)          (8)
                                0               --           --
                             -100              368            5
                             -200              577            8
                             -300              728           10
                             -400            1,249           17

    Management reviews these measurements periodically.  In addition to
monitoring selected measures on NPV, management also monitors effects on net
interest income resulting from increases or decreases in rates. This measure is
used in conjunction with NPV measures to identify excessive interest rate risk.

    Certain shortcomings are inherent in the method of analysis presented in
the foregoing table.  For example, although certain assets and liabilities may
have similar maturities or periods to repricing, they may react in different
degrees to changes in market interest rates.  Also, the interest rates on
certain types of assets and liabilities may fluctuate in advance of changes in
market rates.  Additionally, certain assets, such as adjustable rate mortgage
loans, have features which restrict changes in interest rates on a short-term
basis and over the life of the asset.  Further, in the event of a change in
interest rates, prepayment and early withdrawal levels would likely deviate
significantly from those assumed in calculating the table.  Finally, the ability
of many borrowers to service their debt may decrease in the event of an interest
rate increase.

    In addition, the previous table does not necessarily indicate the impact of
general interest rate movements on the Bank's net interest income because the
repricing of certain categories of assets and liabilities is subject to
competitive and other pressures beyond the Bank's control.  As a result, certain
assets and liabilities indicated as maturing or otherwise repricing within a
stated period may in fact mature or reprice at different times and at different
volumes.

LIQUIDITY AND CAPITAL RESOURCES

    The Company's current liquidity and capital resources are dependent on 
its ability to borrow funds from the Bank and other sources as well as 
receive dividends from the Bank.  The Bank's primary sources of funds are 
deposits, sales of mortgage loans, principal and interest payments on loans 
and mortgage-backed securities, borrowings, and funds provided by operations. 
While scheduled loan and mortgage-backed securities principal repayments are 
a relatively predictable source of funds, deposits flows, prepayments of 
principal on loans and mortgage-backed securities, and sales of mortgage 
loans are greatly influenced by general interest rates, economic conditions, 
and competition. Current OTS regulations require the Bank to maintain cash 
and eligible investments in an amount equal to at least 5% of customer 
accounts and short-term borrowings to assure its ability to meet demands for 
withdrawals and repayment of short-term borrowings.  As of December 31, 1996, 
the Bank's liquidity ratio was 19.27% which was in excess of the minimum 
regulatory requirements.


                                      47


<PAGE>

    During the year ended December 31, 1996, total deposits decreased 
approximately $12,469,000 or 11.3%, and total assets decreased by $10,113,000 
or 8.6% as a part of management's overall strategy to change the product mix 
of deposit accounts offered to its customers and decreasing reliance on 
public fund deposits.

    The decline in deposits was funded primarily by a reduction in cash and 
cash equivalents of $4,553,000, and proceeds from maturities and principal 
repayments of securities available-for-sale and securities held-to-maturity, 
net, of approximately $9,450,000 and $7,291,000, respectively, during 1996.  
In addition to the funding of deposit reductions, the maturities and 
increased principal prepayments on available-for-sale and held-to-maturity 
securities during 1996 were used to fund an increase in loans receivable of 
approximately $11,264,000, which is also the result of the Bank's strategy to 
enhance future earnings through a change in the overall asset/liability mix 
of the Bank's interest-earning assets as they relate to its interest-bearing 
liabilities. The primary changes in the Bank's loan portfolio at December 31, 
1996 as compared to that at December 31, 1995 were in conventional first 
mortgage loans ($6,403,000 or 25.5% increase), consumer and installment loans 
($4,435,000 or 96.2% increase), and construction loans ($915,000 or 86.3% 
increase).

    The Bank's capital for regulatory purposes at December 31, 1996 was 
$5,295,531 or 4.95% of total regulatory assets.  Regulations require savings 
institutions to have a minimum regulatory tangible capital ratio equal to 
1.5% of adjustable tangible assets, a minimum 3% core capital ratio, and a 
minimum 8% risk-based capital ratio.  At December 31, 1996 and 1995, the Bank 
was in compliance with all applicable capital standards.

    In August 1993, OTS issued a final rule which added an interest rate 
component to the OTS risk-based capital requirement effective January 1, 
1994. Under the final rule, savings institutions will be required to 
incorporate IRR into their risk-based capital calculation as of a yet to be 
determined date. Under the rule, IRR is measured as the ratio of the greater 
decline in net portfolio value resulting from a 200 basis point increase or 
decrease in market interest rates to the estimated economic value of assets, 
as calculated by an OTS model.  A savings institution whose measured IRR 
exceeds 2% must deduct from total capital an IRR component equal to one-half 
of the difference between its measured IRR and 2% multiplied by the estimated 
economic value of its total assets.  Institutions unable to satisfy the IRR 
component would be required to submit a capital plan to the OTS describing 
how they will attain compliance in the future.  Management believes that 
compliance with the new IRR measure will not have a material impact on the 
Bank's risk-based capital position.

    Regulatory agreements between the Bank and the OTS require the Bank to 
maintain certain capital levels as described herein (See REGULATORY MATTERS). 
The table below presents the Bank's capital position at December 31, 1996 
relative to the existing regulatory requirements:

                                                                   Percent of
                                                        Amount     assets (1)
                                                        ------     ----------
                                                        (000's)

Tangible capital                                        $5,296        4.95%
Tangible capital requirement                             1,606        4.00
                                                        ------       -----
    Excess tangible capital                             $3,690         .95%
                                                        ------       -----
                                                        ------       -----

Core capital                                            $5,296        4.95%
Core capital requirement                                 3,211        4.00
                                                        ------       -----
    Excess core capital                                 $2,085         .95%
                                                        ------       -----
                                                        ------       -----

Total capital (i.e., core and supplemental capital)     $5,725       13.47%
Risk-based capital requirement                           3,401        8.00
                                                        ------       -----
    Excess total capital                                $2,324        5.47%
                                                        ------       -----
                                                        ------       -----

(1) Based upon adjusted assets for purposes of the tangible capital and 
    core capital requirements, and risk-weighted assets for purposes of 
    the risk-based capital requirement.



                                      48
<PAGE>

    The OTS Capital Distribution Regulation differentiates thrift 
institutions primarily by their capital levels and prescribes the amount of 
capital distributions that can be made without prior OTS approval.

    The Bank has met its liquidity requirements with funds generated from 
operations, proceeds from repayment or sale of loans and investment 
securities, and short-term borrowings.  The Bank believes its requirements 
for 1997 will be met from similar sources.  If alternative funding is needed, 
the Bank can generate additional funds from several other sources.  
Currently, the FHLB system functions as a source of credit for the Bank.


ASSET QUALITY

    ALLOWANCE FOR LOAN LOSSES.  The allowance for loan losses is established 
through a provision for loan losses based on management's quarterly asset 
classification review and evaluation of the risk inherent in its loan 
portfolio and changes in the nature and volume of its loan activity.  Such 
evaluation, which includes a review of all loans of which full collectibility 
may not be reasonably assured, considers among other matters, the estimated 
fair value of the underlying collateral, economic conditions, cash flow 
analysis, historical loan loss experience, discussions held with delinquent 
borrowers and other factors that warrant recognition in providing for 
allowance for loan losses.

    During 1996, net loans increased approximately $11,264,000 or 32.8% from 
December 31, 1995 and the allowance for loan losses increased $1,000.  The 
low level of provision for loan losses and lower levels of charge-offs during 
1996 were primarily due to lower levels of non-performing loans.  With the 
decrease in non-performing loans, management feels the allowance for loan 
losses is adequate for future needs.

    The following presents an analysis of the allowance for loan losses for 
years ended December 31, 1996, 1995, and 1994.


                                             Year ended December 31
                                       ----------------------------------
                                         1996         1995         1994
                                       --------     --------     --------
MORTGAGE LOANS AND CONTRACTS:
Balance at beginning of year           $230,865     $230,865     $280,865
Loans charged-off                            --           --      (50,000)
Recoveries                                1,800           --           --
                                       --------     --------     --------
    Net loans charged-off                 1,800           --      (50,000)
Provision for loan losses charged 
  (credited) to operations                   --           --           --
                                       --------     --------     --------
BALANCE AT END OF YEAR                 $232,665     $230,865     $230,865
                                       --------     --------     --------
                                       --------     --------     --------

CONSUMER AND OTHER:
Balance at beginning of year           $197,024     $230,058     $227,732
Loans charged-off                       (17,882)     (20,878)      (2,917)
Recoveries                                3,795        2,844        1,376
                                       --------     --------     --------
    Net loans charged-off               (14,087)     (18,034)      (1,541)
Provision for loan losses charged 
  (credited) to operations               13,639      (15,000)       3,867
                                       --------     --------     --------
BALANCE AT END OF YEAR                 $196,576     $197,024     $230,058
                                       --------     --------     --------
                                       --------     --------     --------

                                         (Table continues on next page)



                                      49
<PAGE>
                                             Year ended December 31
                                       ----------------------------------
                                         1996         1995         1994
                                       --------     --------     --------
TOTAL ALLOWANCE FOR LOAN LOSSES:
Balance at beginning of year           $427,889     $460,923     $508,597
Loans charged-off                       (17,882)     (20,878)     (52,917)
Recoveries                                5,595        2,844        1,376
                                       --------     --------     --------
    Net loans charged-off               (12,287)     (18,034)     (51,541)
Provision for loan losses charged 
  (credited) to operations               13,639      (15,000)       3,867
                                       --------     --------     --------
BALANCE AT END OF YEAR                 $429,241     $427,889     $460,923
                                       --------     --------     --------
                                       --------     --------     --------
Allowance for loan losses as 
  a percentage of total loans 
  outstanding                              0.93%        1.23%        1.28%
                                       --------     --------     --------
                                       --------     --------     --------

    NON-PERFORMING ASSETS.  Total non-performing assets increased by 
approximately $25,000 during 1996.  The non-performing assets to total assets 
ratio is one indicator of the exposure to credit risk.  Non-performing assets 
of the Bank consist of non-accruing loans, troubled debt restructurings, and 
real estate which was acquired as a result of foreclosure. The composition of 
the Bank's portfolio of non-performing assets is shown in the following table:

                                         1996         1995         1994
                                       --------     --------     --------
                                             (Dollars in Thousands)            
Non-accruing loans*                    $     53     $     --     $    148
Past due 90 days or more and 
  still accruing                             --           --           37
Renegotiated loans**                      1,573        1,573        3,145
Other real estate                            86          114          421
                                       --------     --------     --------
Total non-performing assets            $  1,712     $  1,687     $  3,751
                                       --------     --------     --------
                                       --------     --------     --------
Ratio of non-performing assets 
  to total assets                          1.60%        1.44%        2.98%
                                       --------     --------     --------
                                       --------     --------     --------

  * Primarily loans which are past due for 90 days or more
**  Renegotiated loans are those for which the interest rate was reduced
    because of the inability of the borrower to service the obligation under 
    the original terms of the agreement.

    Interest lost on non-performing assets amounted to $13,186 in 1996 
compared to $75,195 in 1995.

    INVESTMENT SECURITIES - The Bank's available-for-sale and 
held-to-maturity investment securities portfolios experienced significant 
fair market value declines during the year ended December 31, 1996.  This 
decline was primarily the result of long-term interest rate increases in the 
market during that period which resulted in lower fair market values 
associated with the Bank's investments securities portfolios which contain 
fixed rate instruments.  In management's opinion, the fair market value 
decline was not caused by the underlying credit risk of the investments as 
they are comprised entirely of obligations conditionally or unconditionally 
guaranteed by the full faith and credit of the U.S. Government or guaranteed 
by U.S. Government entities. 



                                      50
<PAGE>

OFF-BALANCE SHEET FINANCIAL INSTRUMENTS

    The Bank may be a party to financial instruments with off-balance sheet 
risk in the normal course of business to meet the financing needs of its 
customers and to reduce its own exposure to fluctuation in interest rates. 
These financial instruments include commitments to extend credit (including 
credit cards), standby letters of credit, and financial guarantees.  These 
instruments involve, to varying degrees, elements of credit and interest rate 
risk in excess of the amount recognized in the consolidated statements of 
financial position.  The contract or notional amounts of these instruments 
reflect the extent of involvement the Bank has in particular classes of 
financial instruments.  The Bank uses the same credit policies in making 
commitments and conditional obligations as it does for on-balance sheet 
instruments.

    At December 31, 1996, unfunded credit commitments are as follows:

     Commitments to extend credit         $897,097
     Lines of credit                      $291,016
     Credit cards                         $519,321

    Commitments to extend credit are agreements to lend to a customer as long 
as there is no violation of any condition established in the contract. 
Commitments generally have fixed expiration dates or other termination 
clauses and may require payment of a fee.  Some of the commitments are 
expected to expire without being drawn upon.  The total commitment amounts do 
not necessarily represent future cash requirements.  The Bank evaluates each 
customer's creditworthiness on a case-by-case basis.  The amount of 
collateral obtained, if deemed necessary by the Bank upon extension of 
credit, is based on management's credit evaluation of the customers.

    Standby letters of credit and financial guarantees written are 
conditional commitments issued by the Bank to guarantee the performance of a 
customer to a third party.  Currently, letters of credit are not extended 
beyond one year. The credit risk involved in issuing letters of credit is 
essentially the same as that involved in extending loan facilities to 
customers.  The Bank holds collateral and personal guarantees as deemed 
necessary.  At December 31, 1996, the Bank had no standby letters of credit 
outstanding.

    At December 31, 1996, the Bank had no open interest rate swaps, futures, 
options, or forward contracts.

    At December 31, 1996 and 1995, the Bank had $1,170,442 and $1,832,398, 
respectively, of commitments to sell newly-originated single family 
residential loans.

INCOME TAXES

    At December 31, 1996 the Company had remaining net operating loss ("NOL") 
carryforwards of approximately $6,487,000 for federal income tax purposes 
which expire in varying amounts through 2010. Section 382 of the Code 
provides that these tax NOL carryforwards would be subjected to an annual 
limitation should there be a change of over 50% in the stock ownership of the 
Company during any three year testing period.  Due to the fact that the 
Company has a tax NOL carryforward, it is required to report changes in 
ownership of 5% or greater of stockholders annually to the Internal Revenue 
Service.  The statute and applicable Treasury regulations are extremely 
complex.  The Company believes that no change of ownership as defined in 
applicable Section 382 regulations occurred through the three-year testing 
period ended December 31, 1996. However, the issuance of the stock 
contemplated by the supplemental offering described in REGULATORY MATTERS may 
result in such a change in ownership.  If such a change in ownership occurs, 
the annual use of the tax NOL carryforwards would be subject to an annual 
limitation.

                                       51

<PAGE>

IMPACT OF INFLATION AND CHANGING PRICES

    The consolidated financial statements and related data have been prepared 
in accordance with generally accepted accounting principles which require 
measurement of financial position and operating results in terms of 
historical dollars, without considering changes in relative purchasing power 
over time due to inflation.

    Virtually all of the assets and liabilities of a financial institution 
are monetary in nature.  As a result, interest rates generally have a more 
significant impact on the Company's and the Bank's performance than does the 
effect of inflation.  

IMPACT OF NEW ACCOUNTING STANDARD

    In June 1996, the FASB issued SFAS No. 125, ACCOUNTING FOR TRANSFERS AND 
SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF LIABILITIES, which was 
amended in December 1996.  The Statement provides accounting and reporting 
standards for transfers and servicing of financial assets and extinguishment 
of liabilities.  The Bank is required to adopt certain provisions of SFAS No. 
125 for the year beginning January 1, 1997 and other provisions of the 
Statement for the year beginning January 1, 1998.  The adoption of the new 
standard, as amended, is not expected to have a material impact on the 
Company's and the Bank's financial position or results of operations.

FORWARD-LOOKING INFORMATION

    When used in this report, the words "believes," "anticipates," "expect" 
and similar expressions are intended to identify forward-looking statements.  
Such statements are subject to certain risks and uncertainties which could 
cause actual results to differ materially, including, but not limited to, 
those set forth in "Management's Discussion and Analysis of Financial 
Condition and Results of Operations."  READERS ARE CAUTIONED NOT TO PLACE 
UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF 
THE DATE HEREOF.  THE COMPANY UNDERTAKES NO OBLIGATION TO PUBLICLY RELEASE 
THE RESULTS OF ANY REVISIONS TO THESE FORWARD-LOOKING STATEMENTS WHICH MAY BE 
MADE TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF OR TO REFLECT 
THE OCCURRENCE OF UNANTICIPATED EVENTS.

ITEM 7.       FINANCIAL STATEMENTS

    Financial statements are filed as a part of this report at the end of 
Part III hereof beginning at page F-1, Index to Consolidated Financial 
Statements, and are incorporated herein by reference.

ITEM 8.       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
              FINANCIAL DISCLOSURES

    None

                                       PART III

    The information required by Part III is omitted from this report because 
the Company will file a definitive Proxy Statement for the Company's 1997 
Annual Meeting of Stockholders (the "Proxy Statement") pursuant to Regulation 
14A of the Securities Exchange Act of 1934 not later than 120 days after the 
end of the fiscal year covered by this Form 10-KSB and certain information 
included therein is incorporated herein by reference.

                                       52

<PAGE>

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;     
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

    The information required by this Item is incorporated by reference to the 
Proxy Statement.

ITEM 10. EXECUTIVE COMPENSATION

    The information required by this Item is incorporated by reference to the 
Proxy Statement.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The information required by this Item is incorporated by reference to the 
Proxy Statement.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    The information required by this Item is incorporated by reference to the 
Proxy Statement.

                                       53
<PAGE>

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) EXHIBITS

EXHIBIT NO.                           DESCRIPTION
----------  -------------------------------------------------------------------
    3.1     Certificate of Incorporation of the Company (incorporated by 
            reference from the Company's Registration Statement on Form 8-A, 
            filed October 11, 1996, SEC File No. 001-12309)**

    3.2     Bylaws of the Company (incorporated by reference from the Company's 
            Registration Statement on Form 8-A, filed October 11, 1996, SEC 
            File No. 001-12309)**

   10.1     Agreement and Plan of Reorganization and Plan of Merger 
            (incorporated by reference from the Company's Registration 
            Statement on Form 8-A, filed October 11, 1996, SEC File No. 
            001-12309)**

***10.2     1986 Stock Option and Incentive Plan (incorporated by reference 
            from the Company's Registration Statement on Form 8-A, filed 
            October 11, 1996, SEC File No. 001-12309)**

   10.3     Profit Sharing and Employee Stock Ownership Plan of First Savings 
            Bank, F.S.B. (incorporated by reference from the Company's 
            Registration Statement on Form 8-A, filed October 11, 1996, SEC 
            File No. 001-12309)**

   10.3.1   Amendment Number One to Profit Sharing and Employee Stock 
            Ownership Plan of First Savings Bank, F.S. B. (refiled) 
            (incorporated by reference from the Company's Registration 
            Statement on Form 8-A, filed October 11, 1996, SEC File No. 
            001-12309)**

   10.4     Agreement for Standby Letter of Credit Advances/Confirmation, 
            Collateral Pledge and Security Agreement with FHLB of Dallas 
            (incorporated by reference from the Company's Registration 
            Statement on Form 8-A, filed October 11, 1996, SEC File No. 
            001-12309)**

   10.5     Amended Prompt Corrective Action Directive (incorporated by 
            reference from the Company's Registration Statement on Form 8-A, 
            filed October 11, 1996, SEC File No. 001-12309)**

***10.6     Employment Agreement with Kenneth J. Huey, Jr. (incorporated by 
            reference from the Company's Registration Statement on Form 8-A, 
            filed October 11, 1996, SEC File No. 001-12309)**

***10.7     Employment Agreement with Norman R. Corzine*

   10.8     Bisys Document Processing, Inc. Item Processing Agreement 
            (incorporated by reference from the Company's Registration 
            Statement on Form 8-A, filed October 11, 1996, SEC File No. 
            001-12309)**

   10.8.1   Bisys Document Processing, Inc. Item Processing Agreement 
            (incorporated by reference from the Company's Registration 
            Statement on Form 8-A, filed October 11, 1996, SEC File No. 
            001-12309)**

   10.9     Bisys Data Processing Acknowledgment and Assignment (incorporated 
            by reference from the Company's Registration Statement on Form 8-A,
            filed October 11, 1996, SEC File No. 001-12309)**

   21       Subsidiaries of the Small Business Issuer*

   23       Consent of Independent Accountants*

   27       Financial Data Schedule*

   99.1     Supervisory Agreement between the Bank and the OTS (incorporated 
            by reference from the Company's Registration Statement on Form 
            8-A, filed October 11, 1996, SEC File No. 001-12309)**

-------------------
  *  Filed herewith
 **  Previously filed
***  Designates each management contract or compensatory plan or arrangement
     required to be identified pursuant to Item 13(a) of Form 10-KSB.

                                       54

<PAGE>

(b)  REPORTS ON FORM 8-K

    The following subparagraphs set forth information concerning two Forms 8-K
filed during the fourth quarter ended December 31, 1996:

    1.   On October 18, 1996, the Company's predecessor Registrant, the Bank,
         filed a Form 8-K with the OTS relating to a special meeting of
         the stockholders of the Bank wherein an agreement and plan of
         reorganization dated August 28, 1996 by and between the Bank and
         the Company was approved.  The Form 8-K also announced the
         October 21, 1996 replacement of the Bank's trade symbol on the
         NASDAQ Small Cap Market with the new symbol for the Company.

    2.   On December 23, 1996, the Company filed a Form 8-K relating the
         Company's intent to issue non-transferable Subscription Rights
         for up to 732,198 shares of common stock at a subscription price
         of $5.25 for stockholders of record as of December 20, 1996.

                                       55

<PAGE>
                                      SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities 
Exchange Act of 1934, the Registrant has duly caused this report to be signed 
on its behalf by the undersigned, thereunto duly authorized.

                                       ACCESS ANYTIME BANCORP, INC.

    Date:  March 11, 1997              /s/  Norman R. Corzine                  
                                       ----------------------------------------
                                       Norman R. Corzine, Chairman of the Board,
                                       Chief Executive Officer
                                       (DULY AUTHORIZED REPRESENTATIVE)

    Pursuant to the requirement of the Securities Exchange Act of 1934, this 
report has been signed below by the following persons on behalf of the 
registrant and in the capacities and on the dates indicated.

By: /s/ Norman R. Corzine              By:  /s/ Robert C. Lydick
    ------------------------------          -----------------------------------
    Norman R. Corzine                       R. Chad Lydick
    Chairman of the Board                   Director
    Chief Executive Officer
    Director

    Date:  March 11, 1997                   Date:  March 11, 1997

By: /s/ Ken Huey, Jr.                  By:  /s/ Charles Guthals
    ------------------------------          -----------------------------------
    Ken Huey, Jr.                           Charles Guthals
    President, Chief Financial Officer      Director
    Director

    Date:  March 11, 1997                   Date:  March 11, 1997

By: /s/ Carl Deaton                    By:  /s/ Everett L. Frost
    ------------------------------          -----------------------------------
    Carl Deaton                             Everett L. Frost
    Director                                Director

    Date:  March 11, 1997                   Date:  March 11, 1997

By: /s/ Harry Eastham                  By:  /s/ Thomas W. Martin, III
    ------------------------------          -----------------------------------
    Harry Eastham                           Thomas W. Martin, III
    Director                                Director

    Date:  March 11, 1997                   Date:  March 11, 1997

                                       56

<PAGE>


                  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



                                                                           PAGE
                                                                           ----
Report of Independent Accountants.....................................      F-2

Financial Statements:
    Consolidated Statements of Financial Condition....................      F-3
    Consolidated Statements of Operations.............................      F-4
    Consolidated Statements of Stockholders' Equity...................      F-5
    Consolidated Statements of Cash Flows.............................      F-6
    Notes to Consolidated Financial Statements........................      F-8












                                      F-1

<PAGE>


                      REPORT OF INDEPENDENT ACCOUNTANTS





Board of Directors and Stockholders
Access Anytime Bancorp, Inc.
Clovis, New Mexico


We have audited the accompanying consolidated statements of financial 
condition of Access Anytime Bancorp, Inc. and subsidiary as of December 31, 
1996 and 1995, and the related consolidated statements of operations, 
stockholders' equity and cash flows for each of the three years in the period 
ended December 31, 1996. These financial statements are the responsibility of 
the Company's management. Our responsibility is to express an opinion on 
these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing 
standards.  Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements are free 
of material misstatement.  An audit includes examining, on a test basis, 
evidence supporting the amounts and disclosures in the financial statements.  
An audit also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating the overall 
financial statement presentation. We believe that our audits provide a 
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in 
all material respects, the consolidated financial position of Access Anytime 
Bancorp, Inc. and subsidiary as of December 31, 1996 and 1995, and the 
consolidated results of their operations and their cash flows for each of the 
three years in the period ended December 31, 1996, in conformity with 
generally accepted accounting principles.

As discussed in Note 1 to the consolidated financial statements, the Company 
changed its method of accounting for loan servicing rights during 1995.




Robinson Burdette Martin & Cowan, L.L.P.

Lubbock, Texas
February 17, 1997




                                      F-2

<PAGE>
                                       
                 ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY
                                       
                CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                       
                                       
<TABLE>
                                                                  December 31
                                                         -----------------------------
ASSETS                                                       1996             1995
------                                                   ------------     ------------
<S>                                                      <C>              <C>
Cash and cash equivalents                                $  2,199,227     $  6,752,606
Certificates of deposit                                       380,570          476,425
Securities available-for-sale (amortized cost 
  of $23,838,281 and $33,294,495)                          23,639,686       33,090,085
Securities held-to-maturity (aggregate fair 
  value of $28,470,335 and $36,025,403)                    29,113,430       36,404,135
Loans held-for-sale (aggregate fair value 
  of $576,994 and $874,512)                                   564,361          861,454
Loans receivable                                           45,596,212       34,331,988
Interest receivable                                           598,327          692,771
Real estate owned                                              86,114          113,820
FHLB stock                                                  1,572,334        1,483,434
Premises and equipment                                      1,924,405        1,984,860
Servicing rights                                              345,554          359,854
Organizational cost, net of accumulated 
  amortization of $9,814                                      163,373               --
Other assets                                                  669,764          414,867
                                                         ------------     ------------
         Total assets                                    $106,853,357     $116,966,299
                                                         ------------     ------------
                                                         ------------     ------------


LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Liabilities:
    Deposits                                             $ 98,164,001     $110,633,124
    Federal Home Loan Bank advances                         3,000,000               --
    Accrued interest and other liabilities                    351,135          401,641
    Advanced payments by borrowers for 
      taxes and insurance                                     252,099          311,157
                                                         ------------     ------------
         Total liabilities                                101,767,235      111,345,922
                                                         ------------     ------------

Commitments and contingencies

Stockholders' equity:
    Preferred stock, $.01 par value; 4,000,000 
      shares authorized; none issued                               --               --
    Common stock, $.01 par value; 6,000,000 shares 
      authorized; 732,198 and 695,698 shares issued 
      and outstanding in 1996 and 1995, respectively            7,322            6,957
    Capital in excess of par value                          7,019,577        6,826,442
    Accumulated deficit                                    (1,742,182)      (1,008,612)
    Net unrealized depreciation on available-for-sale 
      securities, net                                        (198,595)        (204,410)
                                                         ------------     ------------
         Total stockholders' equity                         5,086,122        5,620,377
                                                         ------------     ------------
         Total liabilities and stockholders' equity      $106,853,357     $116,966,299
                                                         ------------     ------------
                                                         ------------     ------------
</TABLE>
                                       
              The accompanying notes are an integral part of these 
                       consolidated financial statements.



                                      F-3
<PAGE>
                                       
                  ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY
                                       
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                        
                                        
<TABLE>
                                                          Years ended December 31
                                                 ----------------------------------------
                                                    1996           1995           1994
                                                 ----------     ----------     ----------
<S>                                              <C>            <C>            <C>
Interest income:
    Loans receivable                             $3,476,520     $3,642,581     $3,176,265
    U.S. government agency securities               292,926        515,950        358,973
    Mortgage-backed securities                    3,434,232      4,060,235      4,219,157
    Other interest income                           268,950        197,783        133,789
                                                 ----------     ----------     ----------
         Total interest income                    7,472,628      8,416,549      7,888,184
                                                 ----------     ----------     ----------

Interest expense:
    Deposits                                      4,692,438      5,342,347      4,315,565
    FHLB advances                                    24,663         80,248        247,969
                                                 ----------     ----------     ----------
         Total interest expense                   4,717,101      5,422,595      4,563,534
                                                 ----------     ----------     ----------

Net interest income before provision 
  for loan losses                                 2,755,527      2,993,954      3,324,650
Provision for loan losses charged (credited)         13,639        (15,000)         3,867
                                                 ----------     ----------     ----------
         Net interest income after 
           provision for loan losses              2,741,888      3,008,954      3,320,783
                                                 ----------     ----------     ----------
Noninterest income:
    Loan servicing and other fees                   339,058        371,843        352,449
    Net realized gains on sales of 
      available-for-sale securities                      --             --          4,672
    Net realized gains (losses) on 
      sales of loans                                141,175        117,840        (18,541)
    Other income                                    325,378        343,705        399,362
                                                 ----------     ----------     ----------
         Total other income                         805,611        833,388        737,942
                                                 ----------     ----------     ----------

Noninterest expenses:
    Salaries and employee benefits                1,606,397      1,517,416      1,626,802
    Occupancy expense                               371,413        367,023        368,794
    Deposit insurance premium                     1,144,417        403,218        448,217
    Advertising                                      28,347         27,348         57,587
    Real estate operations, net                      42,826         57,880        272,946
    Professional fees                               250,673        258,961        200,756
    Other expense                                   836,996        796,874        932,720
                                                 ----------     ----------     ----------
         Total other expenses                     4,281,069      3,428,720      3,907,822
                                                 ----------     ----------     ----------

Income (loss) before income taxes                  (733,570)       413,622        150,903

Income tax benefit                                       --             --       (188,650)
                                                 ----------     ----------     ----------
Net income (loss)                                $ (733,570)    $  413,622     $  339,553
                                                 ----------     ----------     ----------
                                                 ----------     ----------     ----------
Net income (loss) per share 
  of common stock                                $    (1.03)    $      .59     $      .49
                                                 ----------     ----------     ----------
                                                 ----------     ----------     ----------
Average shares outstanding                          710,404        695,698        695,698
                                                 ----------     ----------     ----------
                                                 ----------     ----------     ----------
</TABLE>

              The accompanying notes are an integral part of these 
                       consolidated financial statements.



                                      F-4
<PAGE>


                  ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
                                                                                                 Net
                                                                                              Unrealized
                                                                                             Depreciation
                                           Common Stock                                           On
                                       --------------------                                   Available-
                                                                Capital In                     For-Sale
                                       Number Of                Excess Of    Accumulated      Securities,
                                        Shares       Amount     Par Value      Deficit            Net            Total
                                       ---------     ------     ----------   ------------     -----------      ----------
<S>                                     <C>          <C>        <C>          <C>               <C>             <C>
Balance at December 31, 1993            695,698      $6,957     $6,826,442   $(1,761,787)      $ (28,408)      $5,043,204

Net income                                   --          --             --       339,553              --          339,553

Net changes in unrealized 
 depreciation on available-for-
 sale securities, net                        --          --             --            --        (334,995)        (334,995)
                                        -------      ------     ----------   -----------       ---------       ----------

Balance at December 31, 1994            695,698       6,957      6,826,442    (1,422,234)       (363,403)       5,047,762

Net income                                   --          --             --       413,622              --          413,622

Net changes in unrealized
 depreciation on available-for-
 sale securities, net                        --          --             --            --         158,993          158,993
                                        -------      ------     ----------   -----------       ---------       ----------

Balance at December 31, 1995            695,698       6,957      6,826,442    (1,008,612)       (204,410)       5,620,377

Net loss                                     --          --             --      (733,570)             --         (733,570)

Common stock issued                      36,500         365        193,135            --              --          193,500

Net changes in unrealized
 depreciation on available-for-
 sale securities, net                        --          --             --            --           5,815            5,815
                                        -------      ------     ----------   -----------       ---------       ----------
Balance at December 31, 1996            732,198      $7,322     $7,019,577   $(1,742,182)      $(198,595)      $5,086,122
                                        -------      ------     ----------   -----------       ---------       ----------
                                        -------      ------     ----------   -----------       ---------       ----------





                 The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>




                                                      F-5

<PAGE>

                 ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                    CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
                                                                               Years ended December 31
                                                                 ----------------------------------------------- 
                                                                       1996             1995             1994
                                                                 -------------    -------------    ------------- 
<S>                                                               <C>              <C>              <C>
Cash flows from operating activities:
  Net income (loss)                                              $    (733,570)   $     413,622    $     339,553 
  Adjustments to reconcile net income (loss) to cash 
   provided (used) by operating activities:
    Depreciation                                                       133,970          132,527          128,914 
    Deferred income taxes                                                   --               --         (188,650) 
    Provision for loan losses charged (credited)                        13,639          (15,000)           3,867 
    Provision for losses on held-for-sale loans transferred  
     to loans receivable                                                    --               --           88,771
    Amortization of premiums on investment securities                  300,594          207,830          232,387 
    Amortization of loan premiums, discounts and deferred 
     fees, net                                                          (6,148)        (520,723)         (53,622) 
    Amortization of organizational costs                                 9,814               --               -- 
    Gain on sale of loans held-for-sale                               (176,011)        (105,321)         (70,230) 
    Proceeds from sales of loans held-for-sale                       9,058,465        7,625,886       15,205,572
    Originations of loans held-for-sale                             (8,620,197)      (7,698,757)     (13,111,011)
    Provision for losses on foreclosed real estate                         512            1,670           59,748 
    (Gain) loss on disposition of assets                                16,112           (3,095)          (1,200) 
    Gains on sale of mutual funds                                           --               --           (4,672) 
    Net (increase) decrease in accrued interest receivable 
     and other assets                                                 (105,052)          12,188          253,877 
    Net decrease in trading securities mutual funds                         --               --        3,183,503 
    Increase (decrease) in accrued expense and other liabilities       (50,506)         140,723         (101,522) 
                                                                 -------------    -------------    ------------- 

          Net cash provided by (used in) operating activities         (158,378)         191,550        5,965,285
                                                                 -------------    -------------    ------------- 

Cash flows from investing activities:
  Proceeds from maturities and principal repayments of 
    available-for-sale securities                                    9,319,271        2,061,754        1,181,634 
  Purchases of held-to-maturity securities                          (5,017,969)        (750,000)     (16,520,005) 
  Proceeds from maturities and principal repayments of 
    held-to-maturity securities                                     12,145,023        9,630,086       10,917,250 
  Net (increase) decrease in certificates of deposit                    95,855          (87,832)         484,505 
  Net (increase)  decrease in loans                                (11,302,134)       2,037,984        3,950,943 
  Proceeds from sales of foreclosed real estate                         57,613          140,882        1,972,322 
  Proceeds from sale of premises and equipment and other 
    assets                                                                  --               --          245,541 
  Purchases of premises and equipment                                  (89,627)         (64,711)              -- 
                                                                 -------------    -------------    ------------- 

          Net cash provided by investing activities                  5,208,032       12,968,163        2,232,190 
                                                                 -------------    -------------    ------------- 

Cash flows from financing activities:
  Net decrease in deposits                                         (12,469,123)      (2,139,405)     (17,917,092)
  Net change in other borrowed funds                                 3,000,000       (7,400,000)       7,400,000 
  Net increase (decrease) in advance payments by borrowers   
    for taxes and insurance                                            (59,058)          83,324          (15,400) 
  Organizational costs incurred                                       (173,187)              --               -- 
  Rights offering costs incurred                                       (95,165)              --               -- 
  Net proceeds from issuance of common stock                           193,500               --               -- 
                                                                 -------------    -------------    ------------- 

          Net cash used in financing activities                     (9,603,033)      (9,456,081)     (10,532,492) 
                                                                 -------------    -------------    ------------- 

Increase (decrease) in cash and cash equivalents                    (4,553,379)       3,703,632       (2,335,017) 
Cash and cash equivalents at January 1                               6,752,606        3,048,974        5,383,991 
                                                                 -------------    -------------    ------------- 

Cash and cash equivalents at December 31                         $   2,199,227    $   6,752,606    $   3,048,974
                                                                 -------------    -------------    ------------- 
                                                                 -------------    -------------    ------------- 
</TABLE>

                                  (Continued)

                                      F-6

<PAGE>

                  ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (CONTINUED)

<TABLE>
                                                                               Years ended December 31
                                                                 ----------------------------------------------- 
                                                                       1996             1995             1994
                                                                 -------------    -------------    ------------- 
<S>                                                               <C>              <C>              <C>
Supplemental disclosures of cash flow information:
  Cash paid during the year for:
    Interest                                                     $   4,827,856    $   5,312,477    $   4,392,409 
    Income taxes                                                            --               --            9,600 
  Supplemental disclosure of non-cash investing activities
    Real estate acquired in settlement of loans                         53,419          104,509          251,103 
    Loans to facilitate the sale of real estate owned                   23,000          269,150          765,000 
</TABLE>








                   The accompanying notes are an integral part
                   of these consolidated financial statements.


                                      F-7

<PAGE>

                      ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     
BASIS OF PRESENTATION, PRINCIPLES OF CONSOLIDATION AND USE OF ESTIMATES - 
Access Anytime Bancorp, Inc. (the "Company") is a thrift holding company for 
its wholly-owned subsidiary First Savings Bank, F.S.B. a.k.a. First Bank (the 
"Bank") and the Bank's wholly-owned subsidiary, First Equity Development 
Corporation ("FEDCO"). The consolidated financial statements include the 
accounts and transactions of the Company, the Bank and FEDCO. All significant 
intercompany accounts and transactions have been eliminated in consolidation.

The Company was formed in 1996 and, through an agreement and plan of 
reorganization by and between the Company and the Bank, became the holding 
company for the Bank under a stock-for-stock exchange.  As a result of this 
reorganization, all prior year's financial statements are presented to 
reflect the result of the reorganization. There was no effect on those year's 
net income or net income per share of common stock.

The preparation of financial statements in conformity with generally accepted 
accounting principles requires management to make estimates and assumptions 
that affect the reported amounts of assets and liabilities and disclosure of 
contingent assets and liabilities at the date of the financial statements and 
the reported amounts of revenues and expenses during the reporting period. 
Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS - Cash and cash equivalents include cash, due from 
banks and all certificates of deposit with original maturities of three 
months or less.  There are no amounts subject to withdrawal or usage 
restrictions.

TRADING SECURITIES -  Prior to December 31, 1994, the Bank maintained some of 
its excess liquidity in a mutual fund.  The Bank currently holds no mutual 
funds as they were liquidated in 1994.  The investment was for interest rate 
yield enhancement and held principally for the purpose of selling  for 
liquidity needs or when better investment opportunities became available.  
The mutual fund was recorded at fair value with both unrealized gains and 
losses reported in the consolidated statements of operation.

SECURITIES AVAILABLE-FOR-SALE - Securities to be held for indefinite periods 
of time and not intended to be held-to-maturity are classified as 
available-for-sale.  Assets included in this category are those assets that 
management intends to use as part of its asset/liability management strategy 
and that may be sold in response to changes in liquidity needs, interest 
rates, resultant prepayment risk, and other factors related to interest rate 
and resultant prepayment risk changes.  Securities available-for-sale are 
recorded at fair value.  Both unrealized gains and losses on securities 
available-for-sale, net of taxes, are included as a separate component of 
stockholders' equity in the consolidated statements of financial condition 
until these gains or losses are realized.  If a security has a decline in 
fair value that is other than temporary, the security is written down to its 
fair value by recording a loss in the consolidated statements of operations.  

                                  (Continued)
                                      F-8
<PAGE>

                      ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                     (CONTINUED)

NOTE 1        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (CONTINUED)

SECURITIES HELD-TO-MATURITY - Securities for which the Bank has the positive 
intent and ability to hold to maturity are reported at cost, adjusted for 
premiums and discounts that are recognized in interest income using the 
interest method over period to maturity.  If a security has a decline in fair 
value below its amortized cost that is other than temporary, the security is 
written down to its new cost basis by recording a loss in the consolidated 
statements of operations.  The Bank has not experienced a permanent decline 
on securities that would result in a charge to operations.

LOANS HELD-FOR-SALE - Loans to be held for indefinite periods of time and not 
intended to be held-to-maturity are classified as held-for-sale.  Loans 
held-for-sale are recorded at the lower of amortized cost or fair value with 
only net unrealized losses included in the consolidated statements of 
operations.

FEDERAL HOME LOAN BANK (FHLB) STOCK - This asset is owned due to regulatory 
requirements and is carried at cost.  This stock is pledged as collateral to 
secure FHLB advances.

LOANS RECEIVABLE - Loans receivable that management has the intent and 
ability to hold for the foreseeable future or until maturity or pay-off are 
reported at their outstanding principal adjusted for any unearned discount, 
the allowance for loan losses and any deferred fees or costs on originated 
loans.  

Unearned discount on installment loans is recognized as income over terms 
which approximate the interest method.  Interest on other loans is recognized 
using the simple-interest method on the daily balances of the principal 
amounts outstanding.  

The accrual of interest on impaired loans is discontinued when, in 
management's opinion, the borrower may be unable to meet payments as they 
become due.  When interest accrual is discontinued, all unpaid accrued 
interest is reversed.  If the ultimate collectibility of principal, wholly or 
partially, is in doubt, any payment received on a loan on which the accrual 
of interest has been suspended is applied to reduce principal to the extent 
necessary to eliminate such doubt. Otherwise, interest income is recognized 
for such payments.

Loan origination fees and direct origination costs are deferred and 
recognized as an adjustment of the yield of the related loan.

The allowance for loan losses is increased by charges to income and decreased 
by revisions in the estimate of the necessary allowance and by charge-offs 
(net of recoveries). Management's periodic evaluation of the adequacy of the 
allowance is based on the Bank's past loan loss experience, known and 
inherent risks in the portfolio, adverse situations that may affect the 
borrower's ability to repay, the estimated value of any underlying 
collateral, and current economic conditions.                  

                                  (Continued)
                                      F-9
<PAGE>

                      ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                     (CONTINUED)

NOTE 1        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (CONTINUED)

LOAN SERVICING - The cost of mortgage servicing rights is amortized in 
proportion to, and over the period of, estimated net servicing revenues. 
Impairment of mortgage servicing rights is assessed based on the fair value 
of those rights.  Fair values are estimated using discounted cash flows based 
on a current market interest rate.  For purposes of measuring impairment, the 
rights are stratified based on the predominant risk characteristics of the 
underlying loans.  The amount of impairment recognized is the amount by which 
the capitalized mortgage servicing rights for a stratum exceed their fair 
value.

When participating interests in loans sold have an average contractual 
interest rate, adjusted for normal servicing fees, that differs from the 
agreed yield to the purchaser, gains or losses are recognized equal to the 
present value of such differential over the estimated remaining life of such 
loans.  The resulting "excess servicing receivable" or "deferred servicing 
revenue" is amortized over the estimated life using a method approximating 
the interest method.

Quoted market prices are not available for the excess servicing receivables. 
Thus, the excess servicing receivables and the amortization thereon are 
periodically evaluated in relation to estimated future servicing revenues, 
taking into consideration changes in interest rates, current prepayment 
rates, and expected future cash flows.  The Bank evaluates the carrying value 
of the excess servicing receivables by estimating the future servicing income 
of the excess servicing receivables based on management's best estimate of 
remaining loan lives and discounted at the original discount rate.

Effective July 1, 1995, the Bank adopted Statement of Financial Accounting 
Standards ("SFAS") NO. 122, ACCOUNTING FOR MORTGAGE SERVICING RIGHTS, AN 
AMENDMENT OF SFAS NO. 65.  SFAS No. 122 eliminated the accounting distinction 
between rights to service mortgage loans for others that are acquired through 
loan origination activities and those acquired through purchase transactions. 
The effect of adopting this new accounting standard was to increase 1995 net 
income by $11,338.

PREMISES AND EQUIPMENT - Land is carried at cost.  Premises and equipment are 
carried at cost, less accumulated depreciation computed by the straight-line 
method over the estimated useful life of the assets.  Maintenance and repairs 
are charged to expense as incurred and improvements are capitalized.

The Company adopted SFAS No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED 
ASSETS TO BE DISPOSED OF during 1996.  The Statement establishes accounting 
standards for determining the impairment of the Company's long-lived assets. 
Implementation of the Statement did not result in any adjustments to the 
carrying values of the Company's assets.                      

                                  (Continued)
                                      F-10
<PAGE>

                      ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                     (CONTINUED)

NOTE 1        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (CONTINUED)

FORECLOSED REAL ESTATE - Real estate properties acquired through foreclosure, 
or in lieu of foreclosure are to be sold and are initially recorded at fair 
value at the date of foreclosure establishing a new cost basis.  Any excess 
of the loan balance and foreclosure costs over the fair value at the date of 
foreclosure is charged to the allowance for loan losses.  After foreclosure, 
valuations are periodically performed by management and the real estate is 
carried at the lower of carrying amount or fair value less cost to sell. 
Revenue and expenses from operations and changes in the valuation allowance 
are included in loss on foreclosed real estate.  

ORGANIZATIONAL COSTS - Organizational costs are being amortized using the 
straight-line method over five years.

INCOME TAXES - The Company and its subsidiary file consolidated income tax 
returns.   Deferred tax assets and liabilities are reflected at currently 
enacted income tax rates applicable to the period in which the deferred tax 
assets or liabilities are expected to be realized or settled.  As changes in 
tax laws or rates are enacted, deferred tax assets and liabilities are 
adjusted through the provision for income taxes.

NET INCOME (LOSS) PER SHARE - Net income (loss) per share of common stock has 
been computed on the basis of the weighted-average number of shares of common 
stock outstanding during the period.  Stock options have not had a dilutive 
effect. 

IMPACT OF NEW ACCOUNTING STANDARD - In June 1996, the Financial Accounting 
Standards Board ("FASB") issued SFAS No. 125, ACCOUNTING FOR TRANSFERS AND 
SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF LIABILITIES, which was 
amended in December 1996.  The Statement provides accounting and reporting 
standards for transfers and servicing of financial assets and extinguishment 
of liabilities.  The Bank is required to adopt certain provisions of SFAS No. 
125 for the year beginning January 1, 1997 and other provisions of the 
Statement for the year beginning January 1, 1998.  The adoption of the new 
standard, as amended, is not expected to have a material impact on the 
Company's or Bank's financial position or results of operations. 

RECLASSIFICATIONS - Certain amounts for prior years have been reclassified to 
conform with the current year presentation.  These reclassifications had no 
effect on net income (loss) or stockholders' equity.

                                  (Continued)
                                      F-11
<PAGE>

                  ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (CONTINUED)

NOTE 2  SECURITIES

Securities have been classified in the consolidated statements of financial 
condition according to management's intent.  The carrying amount of 
securities and their approximate fair value at December 31 follow:

<TABLE>
                                                Amortized       Gross unrealized         Fair
                                                   Cost        Gains      Losses         Value
                                               -----------    -------    --------     -----------
<S>                                                <C>          <C>        <C>           <C>
AVAILABLE-FOR-SALE SECURITIES:
  December 31, 1996:
    Mortgage-backed securities:
      GNMA adjustable rate                     $23,838,281    $18,365    $216,960     $23,639,686
                                               -----------    -------    --------     -----------

                                               $23,838,281    $18,365    $216,960     $23,639,686
                                               -----------    -------    --------     -----------
                                               -----------    -------    --------     -----------

  December 31, 1995:
    Mortgage-backed securities:
      GNMA adjustable rate                     $28,295,654    $30,691    $230,364     $28,095,981
       Obligation of U.S. government agencies    4,998,841     10,000      14,737       4,994,104
                                               -----------    -------    --------     -----------

                                               $33,294,495    $40,691    $245,101     $33,090,085
                                               -----------    -------    --------     -----------
                                               -----------    -------    --------     -----------

                                                Amortized       Gross unrealized         Fair
                                                   Cost        Gains      Losses         Value
                                               -----------    -------    --------     -----------
<S>                                                <C>          <C>        <C>           <C>
HELD-TO-MATURITY SECURITIES:

  December 31, 1996:
    Mortgage-backed securities:
      FNMA participation certificates          $ 5,355,122    $    --    $162,192     $ 5,192,930
      FHLMC participation certificates          21,896,565      4,818     453,206      21,448,177
      FHLMC adjustable rate                      1,861,743         --      32,515       1,829,228
                                               -----------    -------    --------     -----------

                                               $29,113,430    $ 4,818    $647,913     $28,470,335
                                               -----------    -------    --------     -----------
                                               -----------    -------    --------     -----------

  December 31, 1995:
    Mortgage-backed securities:
      FNMA participation certificates          $ 6,225,192    $    --    $118,411     $ 6,106,781
      FHLMC participation certificates          27,872,939     43,254     268,133      27,648,060
      FHLMC adjustable rate                      2,306,004         --      35,442       2,270,562
                                               -----------    -------    --------     -----------

                                               $36,404,135    $43,254    $421,986     $36,025,403
                                               -----------    -------    --------     -----------
                                               -----------    -------    --------     -----------
</TABLE>


                                                (Continued)

                                                    F-12

<PAGE>

                 ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (CONTINUED)


NOTE 2   SECURITIES  (CONTINUED)

During December 1995, the Bank transferred $32,206,642 of mortgage-backed 
securities and U.S. government agency obligations from the Bank's 
held-to-maturity portfolio into its available-for-sale portfolio. This 
transfer was made by the Bank for asset/liability and liquidity management 
purposes and was made in accordance with an implementation guide for SFAS No. 
115 entitled ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES 
issued by the FASB in November 1995.

Due to the uncertainty of the future utilization of unrealized losses, should 
they be realized, the income tax benefit has been offset by a valuation 
allowance against the resulting deferred tax asset.

The scheduled maturities of securities available-for-sale and 
held-to-maturity at December 31, 1996 were as follows:

<TABLE>
                              Available-for-sale securities:  Held-to-maturity securities:
                              ------------------------------  ----------------------------
                               Amortized            Fair       Amortized          Fair
                                  Cost              Value         Cost            Value
                              -----------        -----------  -----------      -----------
<S>                               <C>                <C>          <C>              <C>
Due in one year or less       $        --        $        --  $ 2,958,156      $ 2,942,355
Due from one to five years             --                 --   24,293,530       23,698,752
Due from five to ten years             --                 --           --               --
Due after ten years            23,838,281         23,639,686    1,861,744        1,829,228
                              -----------        -----------  -----------      -----------

                              $23,838,281        $23,639,686  $29,113,430      $28,470,335
                              -----------        -----------  -----------      -----------
                              -----------        -----------  -----------      -----------
</TABLE>

For purposes of the maturity table, mortgage-backed securities, which are not 
due at a single maturity date, have been allocated over maturity groupings 
based on the weighted-average contractual maturities of underlying 
collateral.  The mortgage-backed securities may mature earlier than their 
weighted-average contractual maturities because of principal prepayments.

Securities of $8,047,826 and $3,319,414 were pledged to secure public 
deposits and for other purposes required as permitted by law at December 31, 
1996 and 1995, respectively.










                                   (Continued)

                                       F-13

<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)


NOTE 3  LOANS HELD-FOR-SALE

The carrying amount of loans held-for-sale and their estimated fair value, as 
determined on an aggregate basis, at December 31, follows:

                                    Gross unrealized
                                  -------------------
December 31    Amortized cost      Gains       Losses    Fair value
-----------    --------------     -------      ------    ----------
   1996           $564,361        $12,633      $  --      $576,994
   1995            861,454         13,058         --       874,512

Proceeds from sale of loans held-for-sale were $9,058,465, $7,625,886, and 
$15,205,572 for the years ended December 31, 1996, 1995 and 1994, 
respectively. Gains of $176,411 and losses of $400 were recognized in 1996, 
while gains of $105,507 and losses of $186 were recognized in 1995, and gains 
of $136,199 and losses of $65,969 were recognized in 1994.

NOTE 4  LOANS RECEIVABLE

The components of loans in the consolidated statements of financial condition 
were as follows:

                                                             December 31
                                                     -------------------------
                                                         1996          1995
                                                     -----------   -----------
First mortgage loans:
  Conventional                                       $31,513,687   $25,110,648
  FHA insured and VA guaranteed                        4,326,093     4,059,531
Consumer and installment loans                         9,047,776     4,612,586
Consumer timeshare loans                                 179,494       560,320
Construction loans                                     1,975,000     1,059,954
Other                                                    387,600       552,822
                                                     -----------   -----------

                                                      47,429,650    35,955,861

Less:
  Loans in process                                     1,077,121       862,760
  Unearned discounts, deferred loan fees, and other      327,076       333,224
  Allowance for loan losses                              429,241       427,889
                                                     -----------   -----------

                                                     $45,596,212   $34,331,988
                                                     -----------   -----------
                                                     -----------   -----------



                                 (Continued)

                                     F-14

<PAGE>

                     ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                     (CONTINUED)


NOTE 4   LOANS RECEIVABLE  (CONTINUED)

An analysis of the changes in allowance for loan losses follows:

<TABLE>
                                                                     Years ended December 31
                                                           --------------------------------------- 
                                                               1996          1995          1994
                                                           ----------    ----------     ----------
<S>                                                        <C>           <C>           <C>
Balance at beginning of year                               $  427,889    $  460,923     $  508,597
Loans charged-off                                             (17,882)      (20,878)       (52,917)
Recoveries                                                      5,595         2,844          1,376
                                                           ----------    ----------     ----------

      Net loans charged-off                                   (12,287)      (18,034)       (51,541)
Provision for loan losses charged (credited) to operations     13,639       (15,000)         3,867 
                                                           ----------    ----------     ----------

Balance at end of year                                     $  429,241    $  427,889     $  460,923
                                                           ----------    ----------     ----------
                                                           ----------    ----------     ----------
</TABLE>


An analysis of the changes of loans to directors and executive officers is as
follows:

<TABLE>
                                                                     Years ended December 31
                                                           --------------------------------------- 
                                                               1996          1995          1994
                                                           ----------    ----------     ----------
<S>                                                        <C>           <C>           <C>
Balance at beginning of year                               $  262,180    $  348,854     $  651,361
Loans originated                                              110,623        30,882         31,099
Loan principal payments and other reductions                  (57,198)     (117,556)      (333,606)
                                                           ----------    ----------     ----------

Balance at end of year                                     $  315,605    $  262,180     $  348,854 
                                                           ----------    ----------     ----------
                                                           ----------    ----------     ----------
</TABLE>

The Bank had outstanding commitments to originate loans at December 31, 1996 and
1995 of approximately $606,000 and $971,000, respectively.

During 1994, loans previously classified as available-for-sale were reclassified
to loans.  The Bank had recognized a loss resulting from a lower of amortized 
cost or fair market adjustment in the amount of $88,771 prior to this transfer.
The recorded amount at the date of transfer was $2,077,261.  At December 31,
1996 and 1995, the remaining unamortized discount related to this transfer was
$69,786 and $76,617, respectively.

Impairment of loans having recorded investments of $1,572,814 at December 31,
1996 and 1995 has been recognized in conformity with SFAS No. 114, as amended by
SFAS No. 118.  Recorded investments in other impaired loans were $138,742 at
December 31, 1996 and $113,820 at December 31, 1995.  The average recorded
investment in impaired loans during 1996, 1995 and 1994 was $1,609,095,
$2,718,350 and $4,969,170, respectively.  Interest income on impaired loans of
$119,377, $261,358 and $262,914 was recognized for cash payments received in
1996, 1995 and 1994, respectively.

The Bank is not committed to lend additional funds to borrowers with 
non-performing or renegotiated loans. 


                                  (Continued)


                                      F-15

<PAGE>

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                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                     (CONTINUED)


NOTE 5   PREMISES AND EQUIPMENT

Components of premises and equipment included in the consolidated statements of
financial condition at December 31, 1996 and 1995 were as follows:

                                                    1996            1995
                                                    ----            ----
Cost:
  Land                                           $   407,593     $   407,593
  Bank premises                                    2,155,531       2,151,745
  Furniture and equipment                          1,318,310       1,281,138
  Automobiles                                         77,646          77,646
                                                 -----------     -----------

          Total cost                               3,959,080       3,918,122
Less accumulated depreciation                      2,034,675       1,933,262
                                                 -----------     -----------

          Net book value                         $ 1,924,405     $ 1,984,860
                                                 -----------     -----------
                                                 -----------     -----------


Certain Bank facilities and equipment are leased under various operating leases.
Rental expense was $8,253 in 1996 and $-0- in 1995.

Future minimum rental commitments under noncancelable leases are:

                       1997                      $    18,771
                       1998                           18,771
                       1999                           17,369
                       2000                           16,443
                       2001                            9,592
                       Thereafter                         --
                                                 -----------        
                                                 $    80,946
                                                 -----------
                                                 -----------

NOTE 6    LOAN SERVICING

Mortgage loans serviced for others are not included in the accompanying
consolidated statements of financial condition.  The unpaid balances of these
loans at December 31 are summarized as follows:

<TABLE>
                                                            1996           1995            1994
                                                       ------------   ------------   ------------ 
<S>                                                     <C>            <C>            <C>
Mortgage loans underlying pass through certificates:
  GNMA                                                 $  2,868,539   $  3,594,512   $  3,890,825
  FHLMC                                                   6,574,245      7,637,528      8,669,839
Mortgage loan portfolios serviced for:
  FNMA                                                   33,904,655     35,531,557     37,689,044
  Other investors                                         1,418,465      1,637,020      1,845,001
                                                       ------------   ------------   ------------ 

                                                       $ 44,765,904   $ 48,400,617   $ 52,094,709
                                                       ------------   ------------   ------------ 
                                                       ------------   ------------   ------------ 
</TABLE>

                                  (Continued)


                                      F-16

<PAGE>

                 ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                     (CONTINUED)


NOTE 6    LOAN SERVICING  (CONTINUED)

Custodial escrow balances maintained in connection with the foregoing loan
servicing were $416,134 and $496,680 at December 31, 1996 and 1995,
respectively.

Mortgage servicing rights of $37,842 and $12,519 were capitalized in 1996 and
1995, respectively.  

Following is an analysis of the aggregate changes in servicing rights asset
balances for the years 1996, 1995 and 1994.

Balance, January 1, 1994                                         $   458,221
Amortization*                                                        (62,584)
                                                                 ----------- 

Balance, January 1, 1995                                             395,637
Amortization*                                                        (48,302)
Originated mortgage servicing rights                                  12,519
                                                                 ----------- 

Balance, January 1, 1996                                             359,854
Amortization*                                                        (52,142)
Originated mortgage servicing rights                                  37,842
                                                                 ----------- 

Balance, December 31, 1996                                       $   345,554
                                                                 ----------- 
                                                                 ----------- 


* Includes valuation adjustments, if any, due to changes in prepayment 
  assumptions


NOTE 7    FORECLOSED REAL ESTATE 

Net losses from foreclosed real estate operations were as follows:

                                            Years ended December 31
                                   ----------------------------------------- 
                                      1996            1995          1994
                                   ----------      ----------    ----------- 
Income:
  Rental income                    $      493      $    1,000    $     2,706
  Gains on sale of real estate            957          13,105            882
Expenses:
  Real estate expenses                (42,807)        (57,209)      (215,905)
  Loss on sale of real estate          (1,469)        (14,776)       (60,629)
                                   ----------      ----------    -----------

Real estate operations, net        $  (42,826)     $  (57,880)   $  (272,946)
                                   ----------      ----------    -----------
                                   ----------      ----------    -----------


                                  (Continued)


                                      F-17

<PAGE>


                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)

NOTE 7  FORECLOSED REAL ESTATE  (CONTINUED)

An analysis of the allowance for losses on real estate owned is as follows:

                                             Years ended December 31
                                        --------------------------------
                                          1996       1995         1994
                                        -------    -------    ----------
Balance at beginning of period          $40,000    $40,000    $1,433,722
Less charges against the allowance           --         --     1,393,722
                                        -------    -------    ----------

Balance at end of period                $40,000    $40,000    $   40,000
                                        -------    -------    ----------
                                        -------    -------    ----------

There were no provisions for further losses on real estate owned during 1996,
1995 and 1994.


NOTE 8  CONCENTRATION OF CREDIT RISK

The Bank invests available funds in mortgage-backed securities and 
interest-bearing deposits and maintains funds in other depository 
institutions, including the FHLB of Dallas.  The Bank currently holds no 
mutual funds as they were liquidated during 1994.  Generally, the Bank's 
investments in U.S. Government securities and mortgage-backed securities are 
recorded in book entry form only, and the Bank does not take possession of 
the actual investment certificates. The Bank's investment in interest-bearing 
deposits, excluding those with the FHLB of Dallas, is normally limited to 
amounts covered by applicable Federal Deposit Insurance Corporation (FDIC) 
limits.

The Bank has two full service bank locations in Clovis, New Mexico and 
another in Portales, New Mexico.  The Bank has also opened a loan production 
office in Rio Rancho, New Mexico, near Albuquerque.  The Bank's primary 
service area includes the New Mexico counties of Bernalillo, Cibola, Curry, 
De Baca, Los Alamos, Roosevelt, Sandoval, Santa Fe, Torrance, Valencia, and 
the Texas counties of Parmer and Bailey.

The Bank has historically been a major lender of mortgage loans in the 
Eastern New Mexico area and is dedicated to the promotion of thrift through 
the solicitation of savings accounts.  The Bank's four offices primarily 
service the Curry and Roosevelt counties of New Mexico and the adjoining West 
Texas counties.  The Bank offers a comprehensive range of credit and 
depository services, while conducting business in a manner based on financial 
stability, service, and community involvement.

The Bank grants consumer, commercial business, commercial real estate, and 
residential loans to customers in its trade area.  Generally, the loans are 
secured by real estate; however, the Bank does make consumer loans and 
commercial loans.  The loans are expected to be repaid from the cash flow of 
the borrowers.  Although the Bank has a diversified loan portfolio, a 
substantial portion of its debtors' ability to honor their contracts is 
dependent upon their own economic situation.


                                 (Continued)

                                     F-18

<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)


NOTE 8  CONCENTRATION OF CREDIT RISK  (CONTINUED)

The Bank's collateral policy is to secure all real estate loans by mortgages, 
place first liens on available assets underlying commercial loans, and 
perfect purchase money liens on consumer loan products.  The Bank grants 
unsecured loans to its customers.

NOTE 9  DEPOSITS

The composition of deposits and the effective rates of interest at December 
31 were as follows:
<TABLE>
                                                                               1996         1995
                                                                           -----------  ------------
<S>                                                                             <C>         <C>
Checking accounts - noninterest bearing                                    $ 1,516,040  $    575,811
Savings accounts (1996 - 2.50%; 1995 - 2.75%)                                8,321,164     9,281,440
Insured Money Market accounts (1996 - 2.80%-4.65%; 1995 - 2.30%-3.70%)      10,511,090    11,414,311
Transaction accounts (1996 - 1.25%-2.70%; 1995 - 2.30%-3.30%)                6,899,439     7,386,076
Certificates of deposit:
  2.01% - 3.00%                                                                 88,325            --
  3.01% - 4.00%                                                              1,059,988       997,702
  4.01% - 5.00%                                                             44,704,647    14,103,880
  5.01% - 6.00%                                                             18,517,979    52,596,029
  6.01% - 7.00%                                                              5,998,426    13,086,788
  7.01% - 8.00%                                                                546,903     1,144,070
  8.01% - 9.00%                                                                     --        47,017
                                                                           -----------  ------------
                                                                           $98,164,001  $110,633,124
                                                                           -----------  ------------
                                                                           -----------  ------------
</TABLE>

At December 31, 1996, the scheduled maturities of certificates of deposits are
as follows:
<TABLE>
                                                                                         Percent of
                                                                              Amount       total
                                                                           -----------  ------------
<S>                                                                            <C>           <C>
1997                                                                       $21,512,160       30.3%
1998                                                                        39,325,240       55.5
1999                                                                         5,603,120        7.9
2000                                                                         2,288,868        3.2
2001                                                                         1,373,703        1.9
Thereafter                                                                     813,177        1.2
                                                                           -----------  ------------

                                                                           $70,916,268      100.0%
                                                                           -----------  ------------
                                                                           -----------  ------------
</TABLE>

At December 31, 1996 and 1995, individual deposit accounts in excess of 
$100,000 amounted to $2,341,263 and $5,272,739, respectively.


                                 (Continued)

                                     F-19

<PAGE>

                 ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (CONTINUED)


NOTE 9  DEPOSITS  (CONTINUED)

Interest expense on deposits for the years ended December 31 was as follows:

                              1996           1995          1994
                          ----------     ----------     ----------
Savings accounts          $  225,687     $  294,322     $  353,869
Money Market accounts        319,687        502,089        486,675
Transaction accounts         150,649        154,712        219,561
Certificates of Deposit    3,996,415      4,391,224      3,255,460
                          ----------     ----------     ----------

                          $4,692,438     $5,342,347     $4,315,565
                          ----------     ----------     ----------
                          ----------     ----------     ----------

At December 31, 1996 and 1995, the Bank had accrued interest payable on 
certificates of deposit totaling $98,320 and $213,729, respectively.  The 
weighted average interest rate on deposits was 4.46%, 4.67%, and 3.60% for 
the years ended December 31, 1996, 1995 and 1994, respectively.

NOTE 10  FEDERAL HOME LOAN BANK ADVANCES

Each FHLB is authorized to make advances to its members, subject to such 
regulations and limitations as the FHLB may prescribe.  At December 31, 1996, 
advances from FHLB were collateralized by investment securities totaling 
$5,068,000 and accrued interest at rates ranging between 5.45% and 5.5% and 
mature in January 1997. The Bank is also required to maintain stock ownership 
in the FHLB of at least a minimum percentage of its loans.  At December 31, 
1996, the Bank maintained an excess investment in stock of the FHLB.  There 
were no advances from FHLB at December 31, 1995.

NOTE 11  INCOME TAXES

At December 31, 1996, the Company had remaining net operating loss ("NOL") 
carryforwards of approximately $6,487,000 for federal income tax purposes 
which expire in varying amounts through 2010.  The Company also has a capital 
loss carryforward of $88,000 for tax purposes which will expire in 1998 and 
1999.  In addition, the alternative minimum tax ("AMT") NOL carryforward and 
AMT credit carryforward were approximately $6,860,000 and $101,000, 
respectively, which expire in varying amounts through 2010.  Investment tax 
credit carryforwards of approximately $44,000 expire in varying amounts 
through 2005.  At December 31, 1996, the Bank had remaining NOL carryforwards 
of approximately $43,947,000 for state income tax purposes which expire in 
varying amounts through 2005.  These state NOL carryforwards are 
substantially more than the federal NOL carryforwards as a result of the 
exclusion of U.S. investment security and other income for state income tax 
purposes.


                                 (Continued)

                                     F-20

<PAGE>
                                       
                  ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY
                                       
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (CONTINUED)
                                       
                                       
NOTE 11     INCOME TAXES  (CONTINUED)

Section 382 of the Internal Revenue Code ("Code") provides that the 
aforementioned tax NOL carryforwards would be subjected to an annual 
limitation should there be a change of over 50% in the stock ownership of the 
Company during any three year testing period.  Due to the fact that the 
Company has a tax NOL carryforward, it is required to report changes in 
ownership of 5% or greater of stockholders annually to the Internal Revenue 
Service.  The statute and applicable Treasury regulations are extremely 
complex.  The Company believes that no change of ownership as defined in 
applicable Section 382 regulations occurred through the three-year testing 
period ended December 31, 1996. However, the issuance of the stock 
contemplated by the supplemental offering described in Note 18 may result in 
such a change in ownership.   If such a change in ownership occurs, the 
annual use of the tax NOL carryforwards would be subject to an annual 
limitation.

Under the Code, the Company is allowed a special bad debt deduction related 
to additions to tax bad debt reserves established for the purpose of 
absorbing losses on mortgage loans.  For taxable years beginning before 
January 1, 1987, the provision of the Code permitted the Bank to deduct from 
taxable income an addition to the tax bad debt reserve based on a percentage 
of taxable income (ranging from 32% to 60%).   Due to changes made by the Tax 
Reform Act of 1986, for tax years beginning after December 31, 1986, the 
percentage has been reduced to 8%.

Stockholders' equity at December 31, 1996 includes approximately $2,100,000 
for which no provision for Federal income tax has been accrued.  These 
amounts represent allocation of income to bad debt reserves for tax purposes 
only. Reduction of amounts so allocated for purposes other than losses on 
loans will create income for tax purposes only, which will be subject to the 
then current corporate tax rate.

The Company, the Bank and FEDCO are parties to a tax sharing agreement.  The 
general provisions of the agreement require the Bank and FEDCO to pay the 
Company on the tax due date the taxes due calculated for each entity.  The 
Company in turn calculates the taxes due on a consolidated basis and forwards 
the required payments to the taxing authorities.

The reasons for the differences between the statutory federal income tax 
rates and the effective tax rates for the years ended December 31 are 
summarized as follows:

                                      1996       1995       1994
                                     -----      -----     -------
Statutory rates                       34.0 %     34.0 %      34.0 %
Effect of net operating loss         (34.0)%    (34.0)%     (34.0)%
Deferred tax asset valuation 
  allowance adjustment                  --         --     (125.01)%
                                     -----      -----     -------
                                        -- %       -- %   (125.01)%
                                     -----      -----     -------
                                     -----      -----     -------

The tax effect of significant temporary differences representing deferred tax 
assets and liabilities and changes thereon were as follows:
                                       
                                  (Continued)



                                      F-21
<PAGE>
                                       
                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY
                                       
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (CONTINUED)
                                       
                                       
NOTE 11     INCOME TAXES  (CONTINUED)

<TABLE>
                                        December 31,       Net        December 31,       Net        December 31,
                                           1994          change          1995           change          1996
                                        -----------     --------      -----------     ---------     -----------
<S>                                     <C>             <C>           <C>             <C>           <C>
OPERATIONAL ITEMS:
------------------

  Deferred taxes assets:
    Net operating loss carryforward     $ 2,255,000     $(99,000)     $ 2,156,000     $ 361,000     $ 2,517,000
    Bad debt deduction and deferred 
      loan fees                             182,000      (20,000)         162,000         1,000         163,000
    Other                                        --        7,000            7,000         1,000           8,000
                                        -----------     --------      -----------     ---------     -----------
                                          2,437,000                     2,325,000                     2,688,000
    Valuation allowance                  (1,795,000)     161,000       (1,634,000)     (320,000)     (1,954,000)
                                        -----------     --------      -----------     ---------     -----------
    Deferred tax assets                     642,000       49,000          691,000        43,000         734,000
                                        -----------     --------      -----------     ---------     -----------
  Deferred tax liabilities:
    Depreciation                           (271,000)      (9,000)        (280,000)        5,000        (275,000)
    FHLB stock dividend                    (182,000)     (36,000)        (218,000)      (34,000)       (252,000)
    Originated mortgage servicing 
      rights                                     --       (4,000)          (4,000)      (14,000)        (18,000)
                                        -----------     --------      -----------     ---------     -----------
      Deferred tax liabilities             (453,000)     (49,000)        (502,000)      (43,000)       (545,000)
                                        -----------     --------      -----------     ---------     -----------
      Net deferred tax asset            $   189,000     $     --      $   189,000     $      --     $   189,000
                                        -----------     --------      -----------     ---------     -----------
                                        -----------     --------      -----------     ---------     -----------

EQUITY ITEMS:
-------------

  Deferred tax assets:
    Investments                         $   124,000     $(54,000)     $    70,000     $  (2,000)    $    68,000
                                        -----------     --------      -----------     ---------     -----------
                                            124,000                        70,000                        68,000
    Valuation allowance                    (124,000)      54,000          (70,000)        2,000         (68,000)
                                        -----------     --------      -----------     ---------     -----------
    Deferred tax assets                          --           --               --            --              --

  Deferred tax liabilities                       --           --               --            --              --
                                        -----------     --------      -----------     ---------     -----------
    Net deferred tax asset              $        --     $     --      $        --     $      --     $        --
                                        -----------     --------      -----------     ---------     -----------
                                        -----------     --------      -----------     ---------     -----------
</TABLE>

NOTE 12     REGULATORY MATTERS

The Bank is subject to various regulatory capital requirements administered 
by the federal banking agencies. Failure to meet minimum capital requirements 
can initiate certain mandatory, and possibly additional discretionary, 
actions by regulators that, if undertaken, could have a direct material 
effect on the Bank's financial statements.  Under capital adequacy guidelines 
and the regulatory framework for prompt corrective action, the Bank must meet 
specific capital guidelines that involve quantitative measures of the Bank's 
assets, liabilities, and certain off-balance-sheet items as calculated under 
regulatory accounting practices.  The Bank's capital amounts and 
classification are also subject to qualitative judgments by the regulators 
about components, risk weightings, and other factors.
                                       
                                  (Continued)



                                     F-22
<PAGE>
                                       
                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY
                                       
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (CONTINUED)
                                       
                                       
NOTE 12     REGULATORY MATTERS  (CONTINUED)

Under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 
("FIRREA") and the implementation of Office of Thrift Supervision (OTS) 
regulations on December 7, 1989, effective date of the new capital standards, 
the Bank must have:  (1) core capital equal to 3% of adjusted total assets; 
(2) tangible capital equal to 1.5% of adjusted total assets; and (3) total 
capital equal to 8.0% of risk-weighted assets, which includes off-balance 
sheet items.

The following table is a reconciliation of the Bank's capital for regulatory 
purposes at December 31, 1996 as reported to the OTS.

<TABLE>
                                                           Tangible        Core         Risk-based 
                                            Assets          capital       capital        capital
                                         ------------     ----------     ----------     ----------
<S>                                      <C>              <C>            <C>            <C>
Total assets                             $106,864,176
Liabilities carried net of assets 
  for regulatory purposes                     (25,400)
Net unrealized depreciation on 
  available-for-sale securities, net          198,595
                                         ------------
Adjusted regulatory total assets         $107,037,371
                                         ------------
                                         ------------
Risk-based assets                        $ 42,515,000
                                         ------------
                                         ------------

Stockholders' equity                                      $5,096,936     $5,096,936     $5,096,936
Net unrealized depreciation on 
  available-for-sale securities, net                         198,595        198,595        198,595
General valuation allowance                                       --             --        429,241
                                                          ----------     ----------     ----------
Regulatory capital                                         5,295,531      5,295,531      5,724,772
Regulatory capital required                                1,605,561      3,211,121      3,401,200
                                                          ----------     ----------     ----------
Excess regulatory capital                                 $3,689,970     $2,084,410     $2,323,572
                                                          ----------     ----------     ----------
                                                          ----------     ----------     ----------
Bank's capital to adjusted 
  regulatory assets                                             4.95%          4.95%
                                                          ----------     ----------
                                                          ----------     ----------

Bank's capital to risk-based assets                                                          13.47%
                                                                                        ----------
                                                                                        ----------
</TABLE>
                                       
                                  (Continued)



                                     F-23
<PAGE>

                     ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                     (CONTINUED)


NOTE 12   REGULATORY MATTERS  (CONTINUED)

In 1992, the Bank was deemed to be undercapitalized by the OTS and agreed to the
issuance in July 1993 of a Prompt Corrective Action Directive ("APCAD"), which
was amended in August 1994.  The APCAD required the Bank to submit a capital
restoration plan to the OTS, prescribed restrictions on dividends, management
fees, asset growth, branching and other matters and established unreserved
capital levels for the Bank.  The Bank is currently in compliance with the
APCAD.   The following table represents the Bank's capital ratios and the APCAD
requirements as of December 31, 1996.

                                                       Actual
                                            APCAD     December
                                          required    31, 1996     Excess
                                          --------    ---------    ------

Core capital ...........................    4.0%        4.95%        .95%
Leverage ratio capital .................    4.0         4.95         .95
Risk-based capital .....................    8.0        13.47        5.47

However, the OTS has sole discretion as to if and when the APCAD will be
removed.

Effective as of June 17, 1996, the Board of Directors of the Bank and the OTS
signed a Supervisory Agreement which states that it is of mutual benefit for the
Bank to do the following:

          1.   Complete and submit a revised business and capital plan which 
               will:
               a.   Increase core capital to 6% as of December 31, 1996,
               b.   Increase core capital to 7% as of June 30, 1997.
          2.   Create an asset/liability and investment committee of the
               Board to oversee and review pricing activities, investment
               selection and interest rate risk.
          3.   Report quarterly on the Bank's operating results and explain
               variances of actual results to budgeted projections.

This agreement may be suspended in part or in whole by the OTS Regional
Director.  In November 1996, the OTS waived the 6% core capital requirement
contained in the Supervisory Agreement.  However, the June 30, 1997 core capital
requirement of 7% is still applicable.  

NOTE 13   STOCK OPTION PLAN

Under the 1986 Stock Option and Incentive Plan ("Plan"), as amended, the Bank
could grant Incentive and Non-Incentive Stock Options, as well as Stock
Appreciation Rights ("SARs") to officers, directors, key employees and other
persons up to a maximum of 68,250 shares of the Bank's common stock.  The Plan
was administered by a committee of the Board of Directors.  The Plan terminated
in August 1996.


                                (Continued)


                                   F-24

<PAGE>

                     ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                     (CONTINUED)


NOTE 13   STOCK OPTION PLAN  (CONTINUED)

Under the provisions of the Plan, stock options have a term that was determined
by the committee, but not to exceed ten years from the date of grant.  However,
in the case of optionees who own in excess of 10% of the outstanding common
stock of the Bank, the term of the stock option may not exceed five years.  The
aggregate fair market value of the options for which any persons could be
granted in any calendar year could not exceed $100,000. 

The following table summarize certain information relative to stock options:

                                                           December 31
                                                       --------------------- 
                                                         1996       1995
                                                       -------   -----------

Number of shares under non-incentive option             12,809        39,000

Option price of shares under option                    $  5.50   $5.25-$6.00

Weighted average option price of shares under option   $  5.50         $5.35

Number of shares exercisable                            12,809        39,000

During 1996, 36,500 shares of common stock were issued in connection with
exercises of stock options.  The aggregate amount of the exercises was $193,500.
The remaining 2,500 options existing at December 31, 1995 expired during 1996. 
There were no stock options exercised during the two years in the period ended
December 31, 1995.

As a result of the aforementioned August 1996 termination of the Plan, there are
no remaining shares of the Bank's common stock available for the issuance of
additional options under the terms of the Plan.

The Company adopted SFAS No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION during
1996.  The Statement defines a fair value based method of accounting (i.e.,
using an option pricing model such as Black-Scholes) for employee stock options
or similar equity instrument plans, but also allows an entity to measure
compensation costs for those plans using the intrinsic value (the amount by
which the market price of the underlying stock exceeds the underlying price of
the option) based method accounting as prescribed by Accounting Principles Board
Opinion No. 25.  The Company has elected to continue using the intrinsic value
based method as allowed by the Statement.  Management believes that had the fair
value of options issued during 1996 and 1995 been recorded as compensation
expense, there would have been an insignificant impact on those year's net
income (loss) and net income (loss) per share of common stock.


                                (Continued)


                                   F-25

<PAGE>

                     ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY
                                           
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                     (CONTINUED)
                                           
                                           
NOTE 14       PROFIT SHARING AND 401(K) PLANS

The Company and the Bank have a profit sharing/employee stock ownership plan for
which substantially all employees are eligible.  Contributions, when made, may
be made in the form of cash or in common stock of the Company.  Contribution
amounts are based upon employee's compensation, but may not exceed maximum
deductible limits for federal income tax purposes.  No contributions were made
in 1996, 1995, and 1994.

Effective January 1, 1989, this plan was amended to include a 401(k) before-tax
salary deferral feature. Employees may elect to contribute to the plan and such
contributions may be matched by the Bank as a percentage of each employee's
contribution.  Employer contributions made to the 401(k) plan for the years
ended December 31, 1996, 1995, and 1994 totaled $3,431, $1,753, and $1,821,
respectively.  Total contributions per employee, for all parts of the plan, made
by the Bank or the employee, cannot exceed the lesser of $30,000 or 25% of the
employee's compensation.


NOTE 15   FINANCIAL INSTRUMENTS

The Bank may be a party to financial instruments with off-balance sheet risk in
the normal course of business to meet the financing needs of its customers and
to reduce its own exposure to fluctuation in interest rates.  These financial
instruments include commitments to extend credit, standby letters of credit, and
financial guarantees. These instruments involve, to varying degrees, elements of
credit and interest rate risk in excess of the amount recognized in the
consolidated statements of financial position.  The contract or notional amounts
of these instruments reflect the extent of involvement the Bank has in
particular classes of financial instruments.  The Bank uses the same credit
policies in making commitments and conditional obligations as it does for 
on-balance sheet instruments.

At December 31, 1996, unfunded credit commitments are as follows:

          Commitments to extend credit   $  897,097
          Lines of credit                $  291,016
          Credit cards                   $  519,321

Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract.  Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee.  Some of the commitments are expected to expire
without being drawn upon.  The total commitment amounts do not necessarily
represent future cash requirements.  The Bank evaluates each customer's
creditworthiness on a case-by-case basis.  The amount of collateral obtained, if
deemed necessary by the Bank upon extension of credit, is based on management's
credit evaluation of the customers.


                                (Continued)


                                   F-26

<PAGE>



                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)


NOTE 15  FINANCIAL INSTRUMENTS  (CONTINUED)

Standby letters of credit and financial guarantees written are conditional 
commitments issued by the Bank to guarantee the performance of a customer to 
a third party.  Currently, letters of credit are not extended beyond one 
year. The credit risk involved in issuing letters of credit is essentially 
the same as that involved in extending loan facilities to customers.  The 
Bank holds collateral and personal guarantees as deemed necessary.  At 
December 31, 1996, the Bank had no standby letters of credit outstanding.

At December 31, 1996, the Bank had no open interest rate swaps, futures, 
options, or forward contracts.

At December 31, 1996 and 1995, the Bank had $1,170,442 and $1,832,398, 
respectively, of commitments to sell newly-originated single family 
residential loans.

SFAS No. 107, DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS, requires 
disclosure of fair value information about financial instruments, whether or 
not recognized on the balance sheet, for which it is practicable to estimate 
that value.  Quoted market prices, if available, are utilized as an estimate 
of the fair value of financial instruments.  Because no quoted market prices 
exist for a part of the Bank's financial instruments, the fair value of such 
instruments has been derived based on management's assumptions with respect 
to future economic conditions, the amount and timing of future cash flows and 
estimated discount rates.  Different assumptions could significantly affect 
these estimates.  Accordingly, the estimates provided herein do not 
necessarily indicate amounts which could be realized in a current exchange.  
Further, as it is management's intent to hold a portion of its financial 
instruments to maturity, it is not probable that the fair values shown below 
will be realized in a current transaction.  In addition, fair value estimates 
are based solely on existing on- and off-balance sheet financial instruments 
without attempting to estimate the value of anticipated future business and 
the value of assets and liabilities that are not considered financial 
instruments.  Examples would include portfolios of loans serviced for others, 
investments in real estate, premises and equipment, and deferred tax assets.

Because of the wide range of permissible valuation techniques and the 
numerous estimates which must be made, it may be difficult to make reasonable 
comparisons of the fair value information to that of other financial 
institutions.  The aggregate fair value amount should in no way be construed 
as representative of the underlying value of the Company and/or the Bank.

The following methods and assumptions were used to estimate the fair value of 
each class of financial instruments for which it is practical to estimate 
that value:

CASH AND CASH EQUIVALENTS - The carrying amount for cash and cash equivalents 
approximates the assets' fair value because of the short maturity of those 
instruments.

SECURITIES - The fair value of long-term investments such as U.S. Government 
and agency obligations and mortgage-backed securities is estimated based on 
bid quotations received from securities dealers and the FHLB.


                                 (Continued)

                                     F-27

<PAGE>

                   ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (CONTINUED)


NOTE 15  FINANCIAL INSTRUMENTS  (CONTINUED)

LOANS RECEIVABLE - Fair values are estimated for portfolios of loans with 
similar financial characteristics. Mortgage loans are segregated by type, 
including but not limited to residential, commercial and construction. 
Consumer loans are segregated by type, including but not limited to home 
improvement loans, automobile loans, loans secured by deposits and secured 
and unsecured personal loans.  Each loan category may be segmented, as 
appropriate, into fixed and adjustable interest rate terms, ranges of 
interest rates, performing and non-performing, and repricing frequency.

For certain homogeneous categories of loans, such as some residential 
mortgages, fair value is estimated using the quoted market prices for 
securities backed by similar loans, adjusted for differences in loan 
characteristics.  The fair values of other types of loans are estimated by 
discounting the future scheduled and unscheduled cash flows using the current 
rates at which similar loans would be made to borrowers with similar credit 
ratings and for the same remaining maturities.  Unscheduled cash flows take 
the form of estimated prepayments and may be based upon historical experience 
as well as anticipated experience derived from current and prospective 
economic and interest rate environments. For certain types of loans, 
anticipated prepayment experience exists in published tables from securities 
dealers.

The fair value of significant non-performing mortgage loans is based on 
estimated value of the collateral.  Where appraisals are not available, 
estimated cash flows are discounted using a rate commensurate with the credit 
risk associated with those cash flows.  Assumptions regarding credit risk, 
cash flows and discount rates are judgementally determined using available 
market information and specific borrower information.  The fair value of 
non-performing consumer loans is based on historical experience with such 
loans.

The fair value of loans held-for-sale is estimated based on outstanding 
commitments from investors or current market prices for similar loans.

FEDERAL HOME LOAN BANK STOCK - The fair value of stock in the FHLB is 
estimated to be equal to its carrying amount given it is not a publicly 
traded equity security, it has an adjustable dividend rate, and all 
transactions in the stock are executed at the stated par value.

DEPOSITS AND ADVANCES FROM BORROWERS FOR TAXES AND INSURANCE - The fair value 
of deposits with no stated maturity, such as interest-bearing or 
non-interest-bearing checking accounts, savings accounts, money market 
accounts and advances from borrowers for taxes and insurance is equal to the 
amount payable upon demand.  The fair value of certificates of deposit is 
based on the lower of redemption or discounted value of contractual cash 
flows.  Discount rates for certificates of deposit are estimated using 
current market rates.

FEDERAL HOME LOAN BANK ADVANCES - The estimated fair value of the FHLB 
advances is normally based upon the discounted value of the differences 
between contractual interest rates and current market rates for similar 
agreements. However, the estimated fair value is the same as the carrying 
value due to the short-term nature of the advances.


                                 (Continued)

                                     F-28

<PAGE>

                 ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (CONTINUED)


NOTE 15  FINANCIAL INSTRUMENTS  (CONTINUED)

OFF-BALANCE SHEET FINANCIAL INSTRUMENTS - The fair value of commitments to 
extend credit is estimated using the fees currently charged to enter into 
similar agreements, taking into account the remaining terms of the agreements 
and the present creditworthiness of the counterparties.  For fixed-rate loan 
commitments, fair value also considers the difference between current levels 
of interest rates and the committed rates.  The fair value of guarantees and 
letters of credit is based on fees currently charged for similar agreements 
or on the estimated cost to terminate them or otherwise settle the 
obligations with the counterparties at the reporting date.

The fair value of off-balance sheet financial instruments is estimated to 
equal the carrying amount at December 31, 1996 and 1995.

NON-FINANCIAL INSTRUMENTS - SFAS No. 107 does not permit financial 
institutions to take into account the value of long-term relationships with 
depositors, commonly known as core deposit intangibles, when estimating the 
fair value of deposit liabilities.  These intangibles are considered to be 
separate intangible assets that are not financial instruments.  Nonetheless, 
financial institutions' core deposits have typically traded at premiums to 
their book values under both historical and current market conditions.

Likewise, SFAS No. 107 does not permit financial institutions to take into 
account the value of the cash flows and income stream derived from its 
portfolio of loans serviced for others.  

The estimated fair values of the Bank's financial instruments are shown below:

<TABLE>
                                                   December 31, 1996            December 31, 1995
                                               -------------------------   --------------------------
                                               Carrying   Estimated fair   Carrying    Estimated fair
                                                amount        value         amount         value
                                               --------   --------------   --------    --------------
                                                                    (In Thousands)
<S>                                               <C>          <C>            <C>            <C>
Financial assets:
  Cash and cash equivalents                     $ 2,199      $ 2,199       $  6,753       $  6,753
  Certificates of deposit                           381          383            476            477
  Securities available-for-sale                  23,640       23,640         33,090         33,090
  Securities held-to-maturity                    29,113       28,470         36,404         36,025
  Loans held-for-sale                               564          577            861            875

  Loans receivable                               45,596       45,856         34,332         35,919
  Accrued interest receivable                       598          598            693            693
  FHLB stock                                      1,572        1,572          1,483          1,483

Financial liabilities:
  Deposits                                       98,164       95,821        110,633        111,710
  Accrued interest payable                          351          351            402            402
  Advance payments by borrowers for taxes and 
   insurance                                        252          252            311            311
  FHLB advances                                   3,000        3,000             --             --
</TABLE>


                                 (Continued)

                                     F-29

<PAGE>

                     ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY
                                           
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                     (CONTINUED)
                                           

NOTE 15       FINANCIAL INSTRUMENTS  (CONTINUED)

The deferred income amounts arising from unrecognized financial instruments 
are not significant.  Also, these financial instruments have contractual 
interest rates at or above current market rates.  Therefore, no market value 
disclosure is provided for these items.

NOTE 16       CONTINGENCIES

In the normal course of business, the Bank is involved in litigation which, 
in the Bank's opinion, will not have a material effect on the Bank.  The 
following is a discussion of additional litigation involving the Bank.

On February 1, 1996, an Order of Dismissal was entered by the court with 
respect to a certain derivative lawsuit ("Derivative Lawsuit") which had been 
filed on May 19, 1994 and amended on November 2, 1994.  The Derivative 
Lawsuit was filed by two stockholders, one of whom was a former director of 
the Bank, alleging a number of intentional and negligent acts and omissions 
in the management of the Bank which allegedly resulted in damages and losses 
suffered by the Bank.  The court dismissed, with prejudice, all claims 
against all defendants, except a former president, who was also chief 
executive officer and a director (the "Former President") of the Bank.  A 
dismissal with prejudice means that the charges cannot be refiled.  The court 
also ordered plaintiffs to pay reasonable expenses, including attorney's 
fees, to the Bank's former independent auditors. A notice of appeal was filed 
by the plaintiff.  The Bank cannot currently predict the outcome of the 
appeal.

If final judgment in their favor is received in the Derivative Lawsuit, 
certain of the current and former director defendants may make demand on the 
Bank for indemnification of their legal expenses pursuant to OTS regulations. 
The disinterested members of the Bank's Board of Directors must approve said 
indemnification and give 60 days notice to the OTS of the Bank's intention to 
make such indemnification.  No such indemnification shall be made if the OTS 
advises the Bank in writing, within the 60 day notice period, of its 
objection thereof. Currently, no demand for indemnification has been made by 
any of the current defendants.

With respect to the Former President, the court dismissed the claims in the 
Derivative Lawsuit without prejudice in order to allow the Bank to pursue 
such claims in Federal Court.  In May 1995, the Bank filed a lawsuit against 
the Former President in the United States District Court for the District of 
New Mexico.  In the lawsuit, the Bank asserts that the defendant engaged in 
fraudulent conduct and breached his duties of loyalty and care to the Bank, 
all of which resulted in losses and damages to the Bank.  The Bank is seeking 
recovery of damages from the defendant in excess of $2.8 million, plus 
interest and punitive damages.  The Bank's lawsuit against the Former 
President is scheduled for trial in March 1997.  Legal fees to date with 
respect to the Bank's lawsuit against the Former President have been accrued 
and paid.  The Company does not anticipate that any future legal fees and 
expenses with respect to this lawsuit will materially adversely affect its 
financial condition or results of operations.

                                     (CONTINUED)

                                         F-30
<PAGE>

                     ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY
                                           
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                     (CONTINUED)
                                           
                                           
NOTE 17       PARENT COMPANY CONDENSED FINANCIAL STATEMENTS

The following condensed statement of financial condition as of December 31, 
1996 and statements of operations and cash flows for the year then ended for 
the Company should be read in conjunction with the consolidated financial 
statements and notes thereto.

                         STATEMENT OF FINANCIAL CONDITION

Assets:
   Cash and cash equivalents                 $         5
   Investment in the Bank                      5,096,936
   Organizational cost, net                      163,373
   Other assets                                   95,165
                                             -----------
      Total assets                           $ 5,355,479
                                             -----------
Liabilities:                                 -----------
   Accounts payable and accrued expenses     $   269,357
                                             -----------
      Total liabilities                          269,357
                                             -----------
Stockholders' equity:                        
   Common stock                                    7,322
   Additional paid-in capital                  7,019,577
   Accumulated deficit                        (1,742,182)
   Net unrealized depreciation on 
    available-for-sale securities, net          (198,595)
                                             -----------
      Total stockholders' equity               5,086,122
                                             -----------
      Total liabilities and stockholders'    
       equity                                $ 5,355,479
                                             -----------
                                             -----------

                                     (CONTINUED)

                                         F-31
<PAGE>

                  ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY
                                        
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (CONTINUED)
                                           
                                           
NOTE 17  PARENT COMPANY CONDENSED FINANCIAL STATEMENTS  (CONTINUED)

                            STATEMENT OF OPERATIONS

Equity in loss of the Bank                                $  (723,756)
Other expense                                                  (9,814)
                                                          -----------
    Net loss                                              $  (733,570)
                                                          -----------
                                                          -----------
                           STATEMENT OF CASH FLOWS

Operating activities:
  Net loss                                                $  (733,570)
  Equity in loss of the Bank                                  723,756
  Amortization                                                  9,814
                                                          -----------
    Net cash provided by operating activities                      --
                                                          -----------
Investing activities:
  Purchase of common stock of the Bank                         (1,000)
                                                          -----------
    Net cash used in investing activities                      (1,000)
                                                          -----------
Financing activities:
  Organization costs                                         (173,187)
  Rights offering costs incurred                              (95,165)
  Increase in payable to Bank                                 269,357
                                                          -----------
    Net cash provided by financing activities                   1,005
                                                          -----------
Net increase in cash and cash equivalents                           5
Cash and cash equivalents at beginning of period                   --
                                                          -----------
Cash and cash equivalents at end of period                $         5
                                                          -----------
                                                          -----------

                                  (Continued)
                                     F-32

<PAGE>

                  ACCESS ANYTIME BANCORP, INC. AND SUBSIDIARY
                                           
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (CONTINUED)
                                           
                                           
NOTE 18  SUBSEQUENT EVENTS

Beginning in December 1996, the Company offered to the then existing
stockholders of the Company subscription rights for the issuance of 732,198
shares of the Company's common stock at a subscription price of $5.25 per share.
Holders of the subscription rights were able to exercise their subscription
rights until the expiration date on February 14, 1997.  An aggregate of 286,054
shares of the 732,198 shares of common stock were subscribed which amounted to
$1,501,783.  The remaining 446,144 shares are now being offered to other
investors at the same subscription price of $5.25 per share.  The supplemental
offering of the remaining shares will expire on March 19, 1997 unless it is
extended by the Company.  Management is currently unable to determine how many
shares, if any, will be sold to other investors prior to the expiration of the
supplemental offering.

On February 12, 1997, the Company entered into a line of credit with a borrowing
capacity of $100,000.  The note bears interest at a prime rate as quoted by THE
WALL STREET JOURNAL and is payable on demand and matures August 12, 1997.  The
note is collateralized by all of the Company's monies, instruments and savings,
checking and other deposit accounts.


                                     F-33

<PAGE>

                            GLOSSARY OF CERTAIN TERMS


The following are definitions of certain terms used in this report on Form 
10-KSB.

ARM................Adjustable Rate Mortgage
BIF................Bank Insurance Fund
CAMEL..............Capital adequacy, Asset quality, Management/administration,
                   Earnings, Liquidity-asset/liability management
CD.................Certificate of Deposit
CRA................Community Reinvestment Act
DIF................Deposit Insurance Fund
EGRPRA.............Economic Growth and Regulatory Paperwork Reduction Act of
                   1996
FDIC...............Federal Deposit Insurance Corporation
FDICIA.............Federal Deposit Insurance Corporation Improvement Act
FHA................Federal Housing Administration
FHLB...............Federal Home Loan Bank
FHLBB..............Federal Home Loan Bank Board
FHLMC..............Federal Home Loan Mortgage Corporation
FICO...............Financing Corporation Funding
FNMA...............Federal National Mortgage Association
GNMA...............Government National Mortgage Association
HOLA...............Home Owners' Loan Act
IRR................Interest Rate Risk
NOW................Negotiable Order of Withdrawal
NPV................Net Present Value
OTS................Office of Thrift Supervision
QTL................Qualified Thrift Lender
SAIF...............Savings Association Insurance Fund
SBA................Small Business Administration
VA.................Veterans Administration


                                     G-1

<PAGE>
                                   INDEX TO EXHIBITS

EXHIBIT NO.                           DESCRIPTION
----------  -------------------------------------------------------------------
    3.1     Certificate of Incorporation of the Company (incorporated by 
            reference from the Company's Registration Statement on Form 8-A, 
            filed October 11, 1996, SEC File No. 001-12309)**

    3.2     Bylaws of the Company (incorporated by reference from the Company's 
            Registration Statement on Form 8-A, filed October 11, 1996, SEC 
            File No. 001-12309)**

   10.1     Agreement and Plan of Reorganization and Plan of Merger 
            (incorporated by reference from the Company's Registration 
            Statement on Form 8-A, filed October 11, 1996, SEC File No. 
            001-12309)**

***10.2     1986 Stock Option and Incentive Plan (incorporated by reference 
            from the Company's Registration Statement on Form 8-A, filed 
            October 11, 1996, SEC File No. 001-12309)**

   10.3     Profit Sharing and Employee Stock Ownership Plan of First Savings 
            Bank, F.S.B. (incorporated by reference from the Company's 
            Registration Statement on Form 8-A, filed October 11, 1996, SEC 
            File No. 001-12309)**

   10.3.1   Amendment Number One to Profit Sharing and Employee Stock 
            Ownership Plan of First Savings Bank, F.S. B. (refiled) 
            (incorporated by reference from the Company's Registration 
            Statement on Form 8-A, filed October 11, 1996, SEC File No. 
            001-12309)**

   10.4     Agreement for Standby Letter of Credit Advances/Confirmation, 
            Collateral Pledge and Security Agreement with FHLB of Dallas 
            (incorporated by reference from the Company's Registration 
            Statement on Form 8-A, filed October 11, 1996, SEC File No. 
            001-12309)**

   10.5     Amended Prompt Corrective Action Directive (incorporated by 
            reference from the Company's Registration Statement on Form 8-A,
            filed October 11, 1996, SEC File No. 001-12309)**

***10.6     Employment Agreement with Kenneth J. Huey, Jr. (incorporated by 
            reference from the Company's Registration Statement on Form 8-A,
            filed October 11, 1996, SEC File No. 001-12309)**

***10.7     Employment Agreement with Norman R. Corzine*

   10.8     Bisys Document Processing, Inc. Item Processing Agreement 
            (incorporated by reference from the Company's Registration 
            Statement on Form 8-A, filed October 11, 1996, SEC File No. 
            001-12309)**

   10.8.1   Bisys Document Processing, Inc. Item Processing Agreement 
            (incorporated by reference from the Company's Registration 
            Statement on Form 8-A, filed October 11, 1996, SEC File No. 
            001-12309)**

   10.9     Bisys Data Processing Acknowledgment and Assignment 
            (incorporated by reference from the Company's Registration 
            Statement on Form 8-A, filed October 11, 1996, SEC File 
            No. 001-12309)**

   21       Subsidiaries of the Small Business Issuer*

   23       Consent of Independent Accountants*

   27       Financial Data Schedule*

   99.1     Supervisory Agreement between the Bank and the OTS (incorporated 
            by reference from the Company's Registration Statement on Form 
            8-A, filed October 11, 1996, SEC File No. 001-12309)**

-------------------
  *  Filed herewith
 **  Previously filed
***  Designates each management contract or compensatory plan or arrangement
     required to be identified pursuant to Item 13(a) of Form 10-KSB.